Master Class: Picking the Right Idea

Master Class Toolbox

Transcript

Andrew: This session here today is for the person who has way too many ideas for businesses, products, whatever, and needs to find a way to narrow them. Is that you? If it is, this is going to be perfect for you. The session today is going to be led by Sarah Thrift. She is the CEO and founder of Insight, a consultancy and training company that helps organizations be better. They partner with them. They work with them. They help them improve.I’ll be here to help facilitate. My name is Andrew Warner. I’m the founder of Mixergy where proven founders like Sarah teach. Sarah, it’s good to have you here.Sarah: Great to be here. Thank you.Andrew: I want to show people the problem that we’re here to solve. The problem is that a great idea isn’t enough. In fact, you told me about a business that tried to work with this organization. What’s this organization?

Sarah: So this is the National Health Service in the UK. The National Health Service provide all public healthcare in the UK, and they’re actually the second largest employer in the world after the Chinese Army.

Andrew: Wow. All right. So then there were telling me about an entrepreneur that tried to do what with them

Sarah: So one of the big problems has been cleanliness in hospitals and a bug called MRSA. And this was causing hundreds of death a year that could be prevented. It was causing a lot of heartache and also a lot of political problems. And so this entrepreneur, her background was as a nurse, and she came up with a protocol. It was a very simple protocol for the way, a protocol to wash hands in a certain way with a certain product that significantly reduced the chances of the bug being passed on.

Andrew: Yep.

Sarah: She had tons of scientific evidence proven. It was proven. I think she had done it already in Dubai. It was proven evidence.

Andrew: And that means great idea proven, will save lives, going to sell to an organization that had lots of money and lots of people. How much money did this entrepreneur make? What kind of killing did she create?

Sarah: Nothing.

Andrew: Nothing. Okay.

Sarah: In fact, she lost money.

Andrew: And that’s exactly the kind of thing we’re trying to avoid that it is not just about picking an idea, it’s about picking it in the right way. And we’re going to help people do it. I want to give people a small taste of what it’s like when it’s done right.

And here’s another entrepreneur that you told me about earlier.

Sarah: Right.

Andrew: What are some of the ideas that he could have picked? In fact, what’s the business, and then what are some of the ideas that he had for products?

Sarah: So this business is the Chocolution. It’s a raw chocolate business. So this is Kieran and his other co-founder, Jake. They both lived in South America. They’d fallen in love with raw chocolate and also saw the big market sort of three, four years ago to come with natural raw products. And so they started to import the ingredients and create their own raw chocolate.

And they were very creative with flavors, very exotic lavender chocolate, all sorts of different types of chocolate. It ranges from these very pure three or four ingredients, no sugar, just some agave nectar.

Andrew: Yep, and I could see a business like that were starting to plateau or were looking for a way to get to the next level. I could see them saying, “You know what? Let’s pick another kind of flavor. What are people into right now? Are they into acai berries? Let’s do that.

Sarah: Exactly.

Andrew: Are they into pomegranate? That’s going to be our next answer. And so he had lots of different options. Which flavor ended up being the big winner for him?

Sarah: None really. Not only that they did flavors, but they also did different shapes. And they were like, “Maybe we need to make the shapes a bit different. So they invested in all sorts of molds.

Andrew: Yes.

Sarah: The individually created for their business to create different shapes of chocolates to make them innovative.

Andrew: Shape wasn’t the answer. Numbers didn’t end up being the answer.

Sarah: Shape wasn’t the answer.

Andrew: Today what did the answer become, and we’ll talk about later on the process. But it was the answer.

Sarah: Right. The answer was to sell a raw chocolate making kit.

Andrew: That allowed other people to make their own finished chocolate to eat and enjoy and share.

Sarah: Exactly.

Andrew: And as a result of that, do you know how well the business did?

Sarah: The business did much, much better. They’ve done tons, not only did they sell loads of these kits but I think they’ve done, I think, 4,000 workshops where they think people to make chocolate. And so you can buy different kits, some with just the ingredients but also some with molds.

Andrew: Yeah.

Sarah: And so you can create your own. It makes a beautiful gift for people.

Andrew: Perfect. And the reason I wanted to talk about that at the beginning was to show that when you have a lot of options sometimes those aren’t even enough. And what we’re going to talk here today is how to not just pick within your collection of ideas floating through your head, but how to pick the right one and understand that sometimes it comes from outside the pool of ideas that you’re currently thinking about. And I invited Sarah here to do it because that’s what she does. She goes into organizations. She helps them do it, and I asked her for what are the steps that you, and I when we’re wrestling with a collection of ideas, what are the steps we can go through, and here is what she said to me. The first one, I kind of rephrase this. I hope it’s okay. Is to talk to people, and do some research. You told me before we stared about this organization, and how they did it.

Sarah: Absolutely. This is Zippers. They are a fashion company based in here in the San Francisco Bay area.

Andrew: Okay.

Sarah: Their two founders, who have a great passion, and experience in fashion. They have an idea that they wanted to create something really striking, something innovative. They talked about transforming dress shirt using zippers, and putting magnets on the sleeves for the cuffs.

Andrew: Okay.

Sarah: They really, in the beginning we’re talking about it this big dreams. If I look, and I’m really blunt about this website I feel I’m looking at the front cover of a (inaudible) novel. I don’t really know what they’re selling me. I think if I read in the detail. There’s a shirt down at the bottom, but I have to really look. Great dream, but what are you selling to me?

Andrew: Yeah. I get that. In fact I’m looking at the site right now. I’ll leave it up for another moment. It says clothing for mankind. I can understand it makes clothing. Maybe through the name Zippers I might assume that what they’re doing is creating zippers for zipper companies that are clothing mankind. That’s not it at all.

Sarah: No.

Andrew: You talk to me about how the first thing that they did was they went out, and talked to people. You said, you would show it to individual people. How would they do it, and why is showing to individual people important?

Sarah: How they would do it is they did it first of all with friends. They said, try this shirt on. Watch me do it. They also went to a set of fashion shows, and did fashion stores. They went into stores, and actually demoed the product.

Andrew: Okay.

Sarah: Both wearing it themselves, and had products of different colors on display. People could try them on, and see how it felt.

Andrew: Okay.

Sarah: The reason this is really important is certainly in my experience is that people want to tell you what they think it is. It’s not always what people tell you. It’s what they do that you should watch for.

Andrew: Okay.

Sarah: That’s really important because people will say, oh, yeah, yeah. I really like your shirt. Watch them put it on. What’s their body language? What works? What doesn’t? Then ask your questions from there. Not necessarily from what they tell you.

Andrew: All right. You know what? I’ve actually heard that enough to know that that is the truth. That I need to do it, and at the same time I have to accept it, and actually do it because it is intimidating when you’re starting out. I imagine here’s my first interview, giving to somebody, and saying, hey, will you watch it? Is so scary. Frankly, just putting it out online, and letting strangers do it without me watching was scary. Can’t imagine.

All right, but you’re saying they took it out. I also pushed before we started, and I said, all right. You show it to a handful of people. You get to watch. Is that enough, and you said, all right. No. It’s not enough. What else do we do? What’s the other part?

Sarah: At the same time for nearly every business you need to look at the market size. What size is this market? You got anecdotal evidence that starts to build from people face to face where you might do Survey Monkey to get data. Then, you also want to look at the market size, the competitors. Understand is there really an opportunity? Is there growth in this market? Is there a way to take share in the market?

Andrew: Okay. Most of the people who are watching, in fact, I’m going to say all the people who are watching are not going to be in the zipper industry.

Sarah: Right.

Andrew: Maybe a handful of them are in the clothing industry. I want to go deeper in here just to learn how it could be done there, and then we’ll bring the ideas back to our tech companies. Where do you get research that shows you how many people want clothing that have zippers, but not regular zippers, and unique zippers. It’s so easy to say everybody is a potential customer. The market is infinite. Perfect. What kind of research are you talking about?

Sarah: You want to look at research for the clothing industry as a start. In this case the main thing is shirts. What’s the market? Is it growing? Is it not? What’s the needs?

Andrew: Okay.

Sarah: Get data on it. First of all, you ideally want to be in a growing market. You also want to look at trends. What’s been happening? That’s what you would want to look at because if you can get a growing market then your chances of success are already better.

Andrew: I see. Of course, growing market. It’s to see how much money is being spent, again, in this case, clothing in general, or is it more innovative clothing, or is it more clothing for runners, or clothing for athletes?

Sarah: In this instance it’s, actually, it’s clothing, and then it’s both innovative clothing, but also, business clothing. Because the big idea here is it’s a dress shirt with a twist, and it can be worn to work. You want to look at that, and say, well, what’s the trend? How much is that needed. Because something that crosses the line that’s, sort of, semi-formal, but also fun at that same time.

Andrew: Gotcha. Okay. All right. Where many that I’ve talked to will say, “Talk to customers.” Put it in their hands. You’re saying, “Yes, absolutely do it” but think beyond it and do some research to see how big this market is. Are there other people like your friends or like the people who you’ve shown it to? Great.

Sarah: Exactly.

Andrew: Let’s go back to . . .

Sarah: And also things like fashion bloggers. Look at what they’re saying and what they’re promoting, like something we also did was like talk to them. Would they promote this product? Because that’s a big line specific in the fashion industry. If someone will promote your product and they’ve got a million readers, then that’s going to do something big for you. So send them the product. Do they like it?

Andrew: You know, that’s an interesting idea. I think that when I started doing a course on how to do interviews, I did it because a lot of people were emailing me about interviews. And I said, “Would you want this? And they said, “Yes”. And I said, “All right. Fine. Will you pay for it?” and they said, “Yes”. So I felt I had my proof, but now I’m realizing that was my proof within a small pool of people. Maybe it’s the hundred people who I happen to know are the full market. Maybe there’s a bigger market. I didn’t even think to look beyond it. I just said, “There must be something here because people are coming to me.”

You’re saying, “That’s enough.” I mean, that’s not enough. That’s a good first half. The second half, Andrew, what you would have advised to do is look and see if this is going to appeal to bloggers. How many bloggers are out there? How big is that market? Is this going to appeal to software developers? How big is that market of software developers who need content for their site that the two matched together will give us a really big picture in understanding of how our potential is. All right.

Sarah: Exactly.

Andrew: I will move on then to the next big point which is to get them all out there and narrow them down by them. What we mean are the ideas. I think you’re actually doing this from your notes. I like this too much. I had to go back into Google and bring it back.

Sarah: Okay. Yeah.

Andrew: This is something we could relate to because it’s in our heads, but very few people put it up on a wall. What are we looking it here?

Sarah: We are looking at ideas, all ideas put on paper. So essentially the common thing I see . . . Often an organization has tons of ideas. It’s not a shortage of ideas that’s the problem.

Andrew: Mm-hmm.

Sarah: It’s like for which idea and someone was like, “Can’t we do all of them?” Well, no. Actually you can’t. I struggled to find examples where people can see multiple ideas that worked. But it’s really important to go through the phase of articulating all of the ideas first because people want to hear them.

Andrew: I’m sorry to interrupt. Why . . . By the way, I get so much feedback on the fact that I interrupt so much, both negative and positive. I apologize to people who are negative. I say, “Hey, hoorah” to the people who are positive about it, but. All right. Why is it important to put it up on a board like this instead of understanding, “Hey, you know what? I have a lot of great ideas that . . .”

The two that maybe stand out today are and then listing those or speaking them out loud. Why do we have to have them up here? Why is that such an important part of the process?

Sarah: Well, two reasons. One, it sort of makes them real, the fact that you have to write them down. It sort of crystallizes them and articulates them like, “This is specifically what I mean.” If there’s vagueness in the idea, it sort of forces them to come clean. So that’s the first thing.

And secondly often people assume that, Andrew, I think you’ve got this idea about this, but actually I don’t really understand your idea. I just assume I do. And I assume you like my ideas better.

Andrew: I see.

Sarah: And so it needs to be heard and like exposed and taken in. And so there’s something in the process of seeing it and verbalizing it that’s really important set for people to acknowledge and heard but also for others to really take on the idea. I was just facilitating a leadership meeting two days ago, and what was really clear that when we got into it, we had done a Survey Monkey of the leadership team in advance.

Two big ideas, one was geographical expansion, this is the education sector. And the other was expansion of services. We had 48% voting for one and 52 for the other. Sounds like a diametric split.

Andrew: Yes.

Sarah: What are we going to do? We can’t do either one. What happened is when I got people to explain what do you mean by expansion of services, everyone had a different view of what that meant. And actually they weren’t really that far apart when we got through it, but it took a few hours of articulating what this means. And actually mapping out, “Here’s the full spectrum of services we could offer.”

This is what we did today. Are we saying we’re going right to here? Actually no one is saying that. People were saying it. Let’s say we’re going from here to here, and then, in fact, we’re already beta testing this. So are we staying stop? Oh no, but I thought you meant we’re going over here because we just talked about that question should we expand our services. Well, that wasn’t specific enough for people to understand what it meant.

And also the other thing we often involve an idea in our head. So even for ourselves, even if you’re on your own, I still do this myself because I realize getting myself to write it down gets me to be clearer.

Andrew: What a great example of how even within an organization where it seems that half of the organization agrees on one idea. When we really dig in deep, we realize that they don’t. I had a similar situation here internally at Mixergy where I hired a developer who happens to be my brother. We are on the same wavelength. In fact our voices sound alike. I said “Michael, we need to be able to allow the audience to add media; to add an image to each of their messages on the message board” and he said “Great. I can do it”. He went out and he put it together and he came back in and what he did was attach the image as a file underneath. I meant no.

The image should be in line so the people can include the image and write underneath it. Small distinction but because we didn’t clarify it, it was confusing and I can understand that when you’re starting out in business or frankly when you have a team of people and you are trying to figure out what product to focus on, that kind of confusion, when there is nothing there becomes even bigger. Actually, I took that screen shot or the photo that you sent over and then the next step is in this photo that you sent.

Sarah: Right.

Andrew: It’s not enough to just put them all up on that board like we saw a moment ago. You want us to do this. What is this?

Sarah: This is prioritization and this happens in one of two ways. The first is either you take the ideas and as a group so in the example I was just giving the actual prioritization happened quite naturally as we talked more and we had quite a bit of information and data amongst the leadership team to prioritize. So in that way we picked out, in this case, three ideas to take forward but you certainly don’t want more than three ideas typically. Sometimes you just want one to really focus on.

Andrew: Okay.

Sarah: Other times you don’t necessarily know so you say “Okay. This is what I think of the likely three. Now let me go and do some work to test that”. So that comes back to some of the things we talked about earlier in terms of okay, go and talk to customers. Talk to suppliers. Go and do some further research and then come back and say “Is this the right thing” and be ready to be wrong. So go in like “I think these are our two best ideas but let’s go and see and maybe we’ll be wrong. The important thing is you don’t lose the other ideas we had on the other bit of paper. You keep those because you might want to come back to those but what you are trying to do is to choose where do you think you are most likely to when at this point and you take those.

Andrew: The company that you talked about earlier, what happened to them? No. It might be too early in their story because you were just working with them. Right?

Sarah: I was just working with them. But what was great is they commented they had been stuck for 3 years with this question and they hadn’t been able to resolve it and actually this meant ‘Oh, we thought we all disagreed but we don’t really’. What we managed to do is we said “Okay. We are back to the spectrum of services”. What we’re saying is what we’re going to do is we are going to limit the spend the X K and then from there we are going to do the other idea which is geographic expansion. So in this case it was actually all possible but the language had sort of made things almost acrimonious because it felt like there was a big slip.

Andrew: Okay. All right. I should say that we are intentionally not saying the names of some of the organizations that you worked with. Internally you are friends with them. [??] works and sits right here at the office.

Sarah: Right.

Andrew: So she knows you. She knows the companies that you work with and we also understand that you promised them that you wouldn’t talk about their business in public so these are stories that we checked out but that we can’t say specifically the company names. All right. On to the big board here. The next big thing that you want us to do is align or waste time. You did this mysterious thing that we’ll understand in a moment with an organization that was working in education.

Sarah: Yes.

Andrew: What did you do there? Again, another company that we won’t mention the name but what did you do there?

Sarah: So actually here was this plethora of ideas. Like a sea of ideas and what we did there was to actually go through and work out who was aligned to what. So I went and pulled that sheet first of all on the alignment point. Alignment is not the same as agreement.

Andrew: Okay.

Sarah: I think if you want to all get consensus [??] then get agreement then the risk is you dilute some of your ideas.

Andrew: Okay.

Sarah: That’s not what I mean by this. What I mean is that you can get the important stakeholders around the room or on the phone or whatever and get people behind an idea. Then you work through that to go okay. Maybe that wouldn’t be my 100% choice but I can align behind that. That’s what you need to get to because then you are moving in the same direction. What I see is really a waste of time and money and effort is where people are working on different things. Even if they sound fairly similar at one level you iterate that. When people are working on different things they are not focused on the same thing.

Andrew: I see.

Sarah: That no only gives mixed messages to [??] people but you’re not focusing all your effort where it could be and really we want this to work and we are going to focus on this and make it work.

Andrew: I see and so actually the education organization that I’m talking about it seems like is the company you mentioned earlier where they weren’t all aligned. Okay So. Even if . . .

Sarah: Exactly. Spin off for Example is [??]

Andrew: Got you. Oh, Sure . What else?

Sarah: Another example would be e-Commerce company , a very large e-Commerce company.

Andrew: Yes.

Sarah: And they were trying to grow their affiliate business, meaning the business they get through other sites online and they get business to them.

Andrew: I know this company. That’s a big part of their business. Yes.

Sarah: That’s a very big part of their business. And If you look at their market, the market is growing, they had not, they sort of recent time not really fulfilled their growth potential. There were lots of concerns internally about their business. What needs to happen? When I get involved the first, there was a sense of may be what to do, there is a lack of ideas. My first observation spending just a little bit of time with the team was they have tons of ideas. The promise that ideas have not been able to translate in to anything real. More than that no one understands these ideas, because they are too many. Like everyone is different things, there has been a switch-off. And because there has been no transaction to resolve it’s bit like Okay, senior leadership is focusing on something else.

Andrews: I see.

Sarah: And so the problem was they were stuck in these sea of ideas. And not able to translate in to results. The ideas don’t mean anything if it can’t translate in to financial impact or other results.

Andrew: Okay. When you try to get an organization to align, I have got a photo of you standing with an organization, I think I can show this. In fact No I can’t. If you put in the Google Docs, I am showing it. When you get in there, how do you get everybody tell lying right away? I mean, frankly, it is tough for two entrepreneurs to say we are going down this path together. I know this is not 100% what you wanted. It’s not 100% what I wanted. But this is the one this is the path that makes the most sense. Let’s do that. It’s hard to do that. It takes days if not weeks or months and sometimes it never happens. When you have a room for the people the way you have when you work with companies. How do you get them to all align so quickly?

Sarah: It’s a really good question. This and I am wondering how to put that in to words. Because it’s a sort of an alchemical question that happens. So essentially, First of all, it gets messy before it gets easier. So the main thing is that everyone feels they have been hurt. That’s why in this picture, this is an action shot , its actually from the education organized [??]. And you can see the flip chart on the wall like and our main discussion I think like everyone like thinking, what do we want? You know, Everyone has to get their ideas[??]. And so that’s the every first starting point. If we don’t have that and also a chance for other people to say, Oh, I don’t realize that was it, can I ask you a few questions? So the starting point is a common understanding and I think we are not trying to make a decision, we are just, let’s be clear what the options are.

Andrew: I see.

Sarah: Because, I would say in trying to give least of third of cases possible more. Once you get on the table, you realize you are not so far apart. You were a bit apart, but not where you thought you were.

Andrew: I see.

Sarah: And that’s extraordinarily common.

Andrew: So, what you are saying is that by agreeing right away to the ground rules and one of them being, we are not necessarily going to pick the right answer. What we are going to do is at least be clear about our options. That takes away people’s fire power and allows them to just come in and explore it as opposed to saying we are going to get in this room, we are going to pick what we are going to do the rest of our lives with our business and then one person inevitably is going to want to drive the conversation over to where he wants, because that’s the goal for the meeting and they have to be that driven.

Sarah: Exactly. Two comments on that. One is that’s why sometimes it helps to have someone external to be in the meeting. Often if there is someone who is leading it who has the idea whether fairly or not fairly he will think what you are trying to get your agenda. Right So that’s why it can be helpful to have someone could be someone in the organization, but he is not so involved or someone totally external. The very thing you described. The second thing is that you say you want to take the pressure of having to make a choice right now for saving some people’s head. For at least now we have the choices. I need to know what do you need to be convinced of these ideas or what do you need to make a decision. What would you have to believe for this to be true? So you focus on what they need to know.

Andrew: Okay.

Sarah: They to believe which somehow de-emotionalizes the decision. Because if it’s like, I have got an idea and you have got an idea and then it hits back your idea versus my idea. We are taking at a certain level that can be quite emotive. Especially if we are very in to that, whereas this is like Okay, well, what would I, Let me just say, Sometimes I get people who have to sell each other’s ideas like I split people into small groups. Okay, I need to take Andrew’s ideas. How would I persuade someone else that Andrew’s idea is right? What would I put in favor of Andrew’s ideas?

Andrew: It’s not going to be a theoretical decision out there so that we can see how it would work with it. Let’s suppose my co-founder and I have different phones. I am Android he is iPhone and we have to decide what we build for first. I say, “Obviously, Android because there are so many different people out there who are using it. That’s the majority. I mean, that’s what more people are using than the iPhone.”

The other person says, “Well we don’t want all these different models. We should go with the iPhone because everyone builds for it. I love the iPhone. People are willing to pay. There’s a good ecosystem.” They both have good arguments. They could butt heads all day. How would we use this, “What would you have to believe” approach to settle this agreement?

Sarah: So, I would ask you what would you have to believe to say that iPhone would make sense for the business? What would you have to know or believe?

Andrew: Okay, so then in that case if my goal is to get the product, the app, in as many people’s hands as possible, what I would have to believe is that more people are going to go into the App Store and download it if it’s free in there.

Sarah: Exactly, so then my question is can we get data on downloading of apps from the Apple Store versus Android.

Andrew: Gotcha.

Sarah: Can we fund that venture? That would be the data.

Andrew: Right, so we’re no longer talking about, mm-hmm?

Sarah: I always go, okay if we can’t get it, what else because sometimes you can get very specific data. Sometimes you have to have a weight of evidence. What would be a proxy for that, for example?

Andrew: That makes sense. Alright, so direct evidence might be we have some research tools internally that allow us to get a sense of how many downloads there are for an app. Nothing’s perfect and I haven’t found anything even that great, but that’ll work.

So we walk in there and say our app is similar to these apps let’s see how many downloads they each got and that helps us settle it. If that’s not enough the proxy might be advertising. If an ad company is willing to talk about how many views it has for apps within each ecosystem, then we use that as a proxy. Neither one is great, but at least now we’re talking about data, not opinion. At least now we’re talking about data that aligns with our goal.

Sarah: That’s exactly different. We’re talking about data, not opinion. That’s exactly what we’re trying to do. We’re trying to de-emotionalize these things and say, “Well, what would you have to believe?” That’s why it’s almost helpful to switch around and say so now prove, try and get evidence to show the counter-argument like for someone else. What would you need to show?

Sometimes you’re like, oh, now I have to do it. It’s not such a bad idea because I’ve found some data that supports this. Your job is like be the other person, role-play it. Persuade me. So, you make it fun and suddenly you’ve forgot it was someone else’s idea. You’re much more; okay what’s the best thing for the organization.

Andrew: You know, these kinds of issues actually cause friction within organizations and not just within organizations, within my scotch night. I have entrepreneurs coming here for scotch. They were having a great time and then I left because I had an appointment. I left them here to just continue the conversation that got very open. This open conversation about a rift between two people about work ended up causing this big argument here within the office that I unfortunately missed because I’m curious about why people argue and I believe I can solve it.

The important point is, not that I believe that I can solve anyone else’s arguments or that I’m very Butt-insky and need to understand what people are arguing about. The important point is, these little arguments about which direction a company can go in, Android, iPhone, build this app, or that app, end up causing rifts that cause a company to separate.

Sarah: Absolutely.

Andrew: Cause people to just lose time and lose friends.

Sarah: I couldn’t agree more. I could not agree more.

Andrew: Yes.

Sarah: Absolutely. They sort of escalate beyond the original point. At some point, often we’ve lost sight of what the original difference of opinion was and it’s gone way beyond that. [??] hard to come back to, well hang on, was this really so significant that we couldn’t work together anymore?

Andrew: Yeah. Frankly even for a one person operation starting out the wrestling match might even be worse because it goes on in our heads. It is should I do this, should I do that, I have this other idea, should I do this? Then we’re arguing with ourselves over and over, again, a big waste of time. Alright, back to the big board here and the next big point for us to talk about is KISS or diss. I know KISS, that’s keep it simple stupid. We’ll understand how that applies here, but what’s diss?

Sarah: Oh, that just means dismiss it basically because. . .

Andrew: Oh, like hip-hop diss. Don’t diss me, brother. I see.

Sarah: Yeah! Exactly because essentially here. . . Let’s suppose, now you have alignment, you have the idea of okay we’re going to align behind. We’re going with Android phones. We’ve done the research. We’ve done the data. We can align behind that decision because the data says that makes sense. Now, we need to have a simple way to articulate it. So, this is particularly important when we have a very technical product in the sense of, if we make it very complicated. . . So, the idea can be very complex. There needs to be a way to articulate it in a simple way.

Andrew: Let’s see how that plays out. I have a screenshot here. I keep calling it screenshot. I have a photo here of a binder. This is one of your clients who happens to be a doctor who is working with a team of other doctors and here’s the part that’s most relevant for us, they were working on a medical device that he wanted to sell. So what is in this thick binder that he’s got?

Sarah: He had all sorts of technical details about the product, information from working with patients, scientific tests. He had an incredible amount of information. Incredible.

Andrew: Mm-hmm. So it’s all this technical information and that’s the part that you are saying is not [kiss].

Sarah: Well what the challenge really was is, he needed investors and his investors typically weren’t a medical expert.

Andrew: Okay.

Sarah: They might have knowledge about the market but they don’t have the very intricate details that he was going into on the intricacy of why this product very technically makes sense. We needed to know the differentiators but they needed to be a way to translate that into language that made sense. Simply in one line or two, what is this product? Simply what need is this product meeting and why is it important. Like why is it different from other products already on the market? What do you need to be able to deliver it? What investment do you need very simply? Tell me that. You can give all the technical details but don’t lead with that because if you lead with that, unfortunately rightly or wrongly, often you’re going to lose people. They can’t see the wood for the trees and work out how to respond.

Andrew: I see. So you are saying it’s not enough to get our ideas out there, narrow down to the ones that we think make the most sense and research them if we can’t articulate them clearly enough then we can’t get the buy in that we need. In this case he was looking for investors. You helped him articulate his product and be clear about it the way you just described. So what happened?

Sarah: So then he was suddenly able to get investors [to say] “oh wow. Okay we get it. This could totally revolutionize the way… it was for testing purposes for cervical cancer in a way that’s much more accurate and also cost effective, less intrusive but we needed to bring out the sort of pain points and the need it was meeting, rather than the very technicalities of it, the system and the electronics of how it actually worked. That’s important but that was more to substantiate that it’s real not how you want to lead with the investors.

Andrew: I see. And so he got investors after that, after he clarified it?

Sarah: He did.

Andrew: Can I say the name of that company? Okay. I don’t want to get…

Sarah: Not sure. Sorry.

Andrew: Alright. Because I have a screen shot and I thought, wait she’s allowed to talk about it, I have the screen shot here. I have a screen shot that includes an award that he won. Fine. Fair enough. It’s the clarity that helped. I keep remembering my conversation with, my interview with Fred Wilson here for Mixergy where I asked him what his challenge was when he was raising money to build his venture capital firm. This is the guy who investing in Twitter, investing in Etsy, investing in tons of the most successful companies out there. What’s the other one I am thinking of? Four Square? So many others. He said, “You know, I was explaining it to my own investors, my theory, my thesis, what I was going to do, explaining it to them in too complicated a way.

These are smart investors and it was still too complicated for them.” Once he started explaining it simpler and simpler and simpler he was able to raise money from his LPs, from his limited partners and was able to then go and make these investments that I talked about. Frankly that’s a very good interview. If someone out there hasn’t seen that interview, or heard it, we didn’t do video, it’s worth going and hearing it. But the big point here is keep it simple or diss. Kiss or diss.

Sarah: Exactly. Something I sometimes say to people is could you explain this to a ten year old child, just really simply, and they go “oh I get it. It’s a device that does this in this case.” Can you explain it in one or two sentences? If you can do that then you are getting somewhere. If you can’t, it’s not that your idea is not good, but it’s that you need to find a way to express it that people listen and then get it straight away.

Andrew: You know the interesting thing is, I did that with you when we started. That’s how we ended up with that 1 sentence I mangled when I started. I said it’s led by Sarah Thrift, C.E.O. and founder of Insight, a consultancy and training company that helps organizations be better. That is 1 sentence and that last part came directly from you. I’ve noticed that experienced entrepreneurs do it better. I always ask that before an interview. I say what’s one sentence that describes what you do. The experienced entrepreneurs always do it better. Series like the first one hundred thousand in revenue that an entrepreneur did or when I talk to an entrepreneur about how the business failed often they can’t do that. Andrew it’s this complicated thing, we did lots of different things. Or Andrew we work on this but were also thinking that and it makes it really complicated. I have noticed that being able to summarize it seems somehow connected to success.

Andrew: All right, well it’s certainly does here and we are going to continue on to the next big point, which is… fail small or succeed big. Now this is where I’m going to bring back our old friend from the top of this conversation. There he is.

Sarah: [Aaron], yeah.

Andrew: So how did he fail small?

Sarah: Basically what they started out by doing, we talked about there, the Royal Chocolate Organization and they were creating all sorts of fantastic exotic flavors of chocolate and tastes, and different shapes.

Andrew: Yes.

Sarah: Effectively, they had a big problem. The shelf life of this chocolate is four weeks. So, what would happen is, they’d make a big batch for a show, and often they had, like, a weekend show, and all of it would be sold out by Saturday lunch time. And then, like, “We have a store, but we don’t have any more chocolates made up, we can make a few, but not the level we need.”

Or, we’d have loads left over, and like, “Now, what do we do?” They’ve got limited shelf life. They’d try and do things, but they couldn’t always. They had a lot of wastage.

Andrew: Yep.

Sarah: So they were sort of doing things, and they were sort of…It wasn’t really working. It was, I guess, the sort of failing small. They were spending a lot of money. They certainly weren’t making any money at all. They were making a loss. And so, they kept iterating, thinking, “Well, we’ll try different things. Maybe it’s this. Maybe we have something really unusual and catchy. That’s going to do it.”

Andrew: Yes.

Sarah: At the same time, what they started to do, is they started to make chocolate when they went to exhibit. They might do that at a show. They had certain stores where they’d go in for the afternoon. They’d make some, so they’d be doing it to get people to come and talk to them. Well, what happened is people became really interested in the actual making of the chocolate and how that worked. “Wow, so it’s just like three ingredients?”

Andrew: Uh-huh.

Sarah: “Is that what you do?” And has, “Oh.” Then, the kids, especially, like, “Wow! Look at this.” So their feature became much more the making of the chocolate, rather than the chocolate itself.

So, what was good was had they just spent everything on developing more and more flavors, at some point they would have totally run out of money, and that probably would have been it. What happened, almost by accident, but beautiful design, they , “Hang on, I think there’s a market in selling more chocolate making kits because people are interested. They said, “Oh, I’d love to be able to do that. What about if we teach people how to do this, but also sell the kits with the raw ingredients, and that takes away our biggest problem, which is shelf life because we put that into the customers’ hands, and then, thus, they can deal with it and they can make the chocolate when they need it. ”

Andrew: I see. And so, if they’re failing small, are you saying that their first test is just one workshop, something like this? Let me zoom in. No, that’s not the workshop. Here is the. . .

Sarah: [??] the other one. Yeah, that’s it. That’s it.

Andrew: There it is. This is the workshop, right there.

Sarah: Yeah, exactly.

Andrew: So, it started to fail small by saying, “All right. We have this idea, people seem to be liking it. Let’s try a small workshop and see what happens,” and then it becomes something as big as what I’m showing up on the screen.

Sarah: Exactly. So I went to all of their early workshops, and what they did is [Curum], one of the founders, was a former school teacher. So he had links with local schools, so we did some testing with school kids, and say, “Well, did they get engaged? Is it exciting? What’s the feedback?”

I just went and talked to the kids, like, and they’re like, “Oh, It’s so exciting! We made this.” And so, you could get to test it really cost-effectively with a local audience to see if it’s going to work.

Then, the second thing was to actually put together some demo kits and talk to parents, like, “When would you have this? Is this something you’d buy for yourselves, or your kids, as a gift?” and start to understand, well, what’s the market, and what would people pay for it? They were able to test it in a small way.

Andrew: I hate to cook. I would never cook, but I want this. I would do this. It seems like fun.

Sarah: Yeah.

Andrew: So actually, I don’t know anything about chocolate, the ingredients. This is the box that goes out.

Sarah: Yep.

Andrew: Right?

Sarah: Yep.

Andrew: The ingredients in chocolate, you said there are three of them, and they don’t go bad if I leave them around for a week?

Sarah: Not at all.

Andrew: I had no idea.

Sarah: Hmm-mmm, because basically, they’re just like cacao, the nibs, the cacao butter, and then you can put some agave in it, because it tends to be pretty bitter. It’s up to you if you want it, but it’s really that simple. Then, in the kits, you can also get flavors if you want. They also have a bunch of recipes you can do for orange, or lavender, or whatever, and also buy molds. But, they’re very simple, very, very simple, as you can take a tray, like for ice cubes. Just takes like 10 minutes. You melt the ingredients. You pop it in, pop it in the freezer.

Andrew: And then you’ve got your chocolate.

Sarah: You can eat it [??].

Andrew: Wow. All right. So, fail small, succeed big. Back to the big board here for the final point for us to talk about, which is to refine or decline…I like how some of these rhyme. For that, you’re telling me and Marie about this company.

Sarah: Yes.

Andrew: What is this company?

Sarah: This is Zhi Tea. It’s a tea company based in Austin, Texas.

Andrew: OK. And then. . .

Sarah: And they have beautiful tea, like they have. . . Actually, no, no, quite now, but something like 70, it might be more than this, but they have about 70 different types of tea. They personally blended all the flavors of tea, and the packaging, in particular, is beautiful. You get this tin. It’s got stickers embossed. It’s very beautiful and stylish.

Andrew: I see.

Sarah: And this tea tastes amazing.

Andrew: It does look really nice. All right. So then, they had an issue where this beautiful packaging was actually starting to cost them more and more money. Big problem, right. And they had to figure out what to do because they were starting to lose money this is ET. So what happened, how did they find their way to success there?

Sarah: So let me just if I may, give a little bit of context. So what was interesting here was they had success. This is more when you have a successful product. But they’ve already got that. So they’ve gone through these step, they’ve found the market, they’ve got alignment, they’ve tested it.

They test it and they were pretty successful. They have the store in Austin alongside their warehouse, they shipping products all across the U.S. But then what happened though is an external circumstance. So tea prices started to go up dramatically and also the dollar versus various Asian currencies was not in the favor of the dollar.

And so they started to the double whammy of these cost rising. But it starts to be not profitable to sell the same tea, in the same packaging. So there’s an example where they needed to evolve something about the idea or how they were marketing it or pricing it in order to respond. So this is quite a common things I see which is you have a successful idea, but you can’t necessarily leave it just as is, things need to evolve for it to continue to be successful and to grow.

Andrew: Okay, oh sorry. Is it kind of weird would I just put the camera on you and I’m completely invisible here like this? A little bit. Yeah, so then in order to evolve it, what do they do? Costs are rising their products is beautiful, so they can start to put this in a cheap cardboard box. Or can they?

Sarah: Well they can. But the first thing was it was incredibly [??] because the team was very attached to the packaging. And I understood why because it is beautiful. But I was there to be like, we are making a loss on every one of these we sell, we are making a loss. So and I don’t see that changing.

So we can continue. So there’s a couple of obvious options at this point. One is will we explore different options for packaging which are cheaper, or we cut the price out. So what we need to do is understand well which of these makes more sense. And we need to… back to something we talked about earlier. We sort of need to de-emotionalize the decision. I think we emotion was we can’t change the packaging.

And we can’t put the price up because we’ll lose all our customers. I’m like, then we need another idea because just continuing is not going to get any better. It’s going to get worse. And so what we did was we looked, well two things we looked at what different packaging would be. So for example going away from a tin to some sort of plastic or paper pouch. And secondly, we went and talked to customers in the store and asked them well, why do you buy this tea?

What’s an important part of the experience? What would you, like did you know that tea prices are rising? How would feel if the price of this went up to cover the cost? What would make more sense for you? Would you rather have the product at the same price, with different packaging? Or is this packaging an important part of the experience?

And so we went and tested and asked people. And also again back to something I did earlier we really watched for people’s body language. Because people don’t always want to sort of tell you, oh I wouldn’t buy it anymore. So you have to watch and say, how do I ask them in way that goes, okay so tell me like if this was your business for example what would you do. So turn it around so they feel they can tell you honestly the answer.

And in the case what we discovered was the customers are incredible loyal and really love the packaging. And so there was tolerance for some price rises. And we also looked to other competitors to see if it was in line.

And so what actually happened was there was a double digit price rise literally over night for all the products. And there was not any fall off at all in volume and I met Jeffery the founder was like, wow I was waiting, what’s going to happen. No change.

Andrew: I got my notes here from your conversation with Ann Marie Ward, who produced this. Said, Jeffery freaked, he saw that… can I say what the increase was? What percentage?

Sarah: Yeah, sure.

Andrew: Yeah, I can, right? I don’t think this should be a secret. Everyone who went and bought it should know. It’s roughly 25%. That’s 25% increase and people are still buying it. And that’s because of the resource that you did.

I think I as an entrepreneur would have thought, you know, 25% is a little too much it’s going to hurt our customers it’s not going to come in. But I understand now how the combination of both talking to people and hearing and getting their subjective feedback, and looking and doing resource to see that others were also increasing in their market. Increasing their prices, boom that means that both bit of information are helping me say, it’s time to raise mine.

I still would freak out, I would freak out before, and I did it. I would freak out during. And then I would freak out when you came back and said, Andrew, guess what we didn’t lose and volume, that would really be exciting.

Sarah: And I was still holding inside, because I want to do the right thing obviously with my, people I work with. So I was waiting for all the evidence suggested, and we said, okay we’re going to do it and we need to fee [?].” And the thing was we had to do a significant hike, because otherwise we’d be in a situation where we, we do a little bit and then, in– I said to him “It’s worse if in three months’ time we have to do it again. So given where this is going, let’s just do it.”

Andrew: Oh yeah.

Sarah: And be done. So that’s also how we looked– so it was, I would say we took a calculated risk in taking all the information, then said “now we need to do this.”

Andrew: All right. So, before we wrap it up I want to ask you a couple of questions. The first is we started out this conversation talking about a company that had an idea– an entrepreneur that had an idea that would have saved lives that was meant for an organization that had the money to pay for it, and it still didn’t work out. Now that we have a list of ideas that we know we can go through, and we need to pick the right product, or the right business out of many different options. Which of these do you think would have saved the entrepreneur that you talked about at the top of the interview?

Sarah: The most important one for them was the third one, it’s a line [?] always time.

Andrew: Okay.

Sarah: So in this case they had a good idea, they had a market need, and they had chosen the idea as quite specific. But what needed to happen, particularly with an organization of the size and the complexity of the National Health Service in the U.K. is that there need to be a lot of discussions to get enough supporters and alignment behind it.

Andrew: Okay.

Sarah: And you’re talking about a mixture in this case of, medical staff, managerial administrative staff, people that sort of trust overall government quality hospital. So you need it to be, getting buying at different levels, and also hearing concerns at different levels. And you need enough, typically I say in an organization, you, you need like an amount of support to make a big change in organization, you often need something like thirty percent of support behind it. And at that point you have a tipping point for momentum.

Andrew: I see.

Sarah: And then the idea sells itself. And so without that, in this case they had a fantastic idea, but they’re talking about a big organization to sell to where they really need buy in. So it’s not enough just to have a brilliant idea if you can’t get the people who are the decision makers and implementers to believe this is the right thing to do.

Andrew: And that’s such a painful thing to acknowledge and an important one too. The idea, the great idea isn’t enough, the alignment, the alignment and the research and everything else helps. Alright here’s the other thing. I’ve got here a map with where you do your training, right? In addition to consulting; I’m assuming that consulting is probably going to be very expensive. Do you talk about how much that costs before we get into the training?

Sarah: Sure. I mean it depends on the organization, but it’s often, you know, tens of thousands of dollars to do it.

Andrew: What size organizations do you do training with?

Sarah: Well with training it’s a real mixture–

Andrew: Oh sorry, you do consulting with.

Sarah: Sorry.

Andrew: Where, where, I know one of the companies that we weren’t allowed to mention.

Sarah: Yeah.

Andrew: It’s a publicly traded company, They’re a multi-billion dollar company, I think, right? But how small an organization do you do consulting for?

Sarah: Also do for small organizations, too. But we do it in a different fee structure in recognition that they don’t have the same resources of a large organization.

Andrew: Okay. Two person operation? Ten person company? Hundred?

Sarah: So it, yes it can be. Typically the type of work will be more tailored, so with a very big organization we might go in and do a sort of eight week project. So for the company you were just referring to we just did an eight week piece of work to prioritize a whole bunch of choices for them, that was to add one billion dollars of growth to their business. So we’re very big scale of magnitude.

Andrew: I see.

Sarah: So it makes sense for them to pay for that work to be done. If I’m talking about a two or ten person organization, sometimes it’s myself and my team facilitating couple of meetings and just giving some advice and pointers and helping people get to alignment can be the biggest impact. And that can be just a couple of days work.

Andrew: Alright and then the other thing that you offer is these “in-person courses.”

Sarah: Yeah.

Andrew: Right? This is some of the places . . .

Sarah: Yeah.

Andrew: . . . where you’ve done them?

Sarah: Exactly. So let me tell you about those. So they’re done in two ways. One is within organization, so the company we’re just talking about, the big e-Commerce company, they also bought the course. And I ran it in Termy [SP] for them, and we did that over a period of six weeks of workshop every two weeks with, they worked on the specific, you know, prioritizing of issues in between so we could get to an answer at the end. I also then do these for the general public, and anyone can come, I’m just about to fly tonight to Nebraska, starting workshops next week in Minneapolis, and Chicago, and New York.

Andrew: Okay.

Sarah: And I make those very accessible for entrepreneurs to come along and learn with other entrepreneurs.

Andrew: All right, and the place if anyone wants to go see, the website is Insight Consultancy Solutions.com, InsightConsultancySolutions.com, right? That’s the best way for them to connect with you?

Sarah: That’s the best way.

Andrew: All right. Sarah, thank you so much for being a part of this.

Sarah: Thank you.

Andrew: If anyone got any value out of this, I always say this and frankly you guys might be tired of it, but things that make sense are worth repeating. And the thing that makes the most sense is; if you get anything of value out of this session here, out of our course, or out of anything you read online, oh I’m telling you you should contact the person and let them know. Or if you go to an event live, let them know. I’ve seen entrepreneurs contact guests that I’ve talked to, and end up working for them, end up flying out and working at their office. Or, sorry, those aren’t entrepreneurs, those are students who’ve done it; students are so much better following up with this.

Andrew: But I’ve seen others get together for meals, I’ve seen others get do biz dev [??], in fact the founder of, what was that company? Olark, oh, Olark. Olark used to, the founder of Olark used to listen to my interviews to get to know entrepreneurs that he should go do biz dev with, he would shoot them an email, he would get to know them, and then afterwards he’d create these biz dev opportunities where his product, Olark, was integrated with the product the person was talking. Anyway. I’m not saying that that’s what you should be aiming for, I’m saying what you should do is start by saying “thank you, I’m going to do it right now.” And when you say thank it often is the beginning of a much bigger conversation and much bigger friendship and relationship later. So Sarah Thrift, thank you so much for being here and teaching my audience.

Sarah: My pleasure, thank you, Andrew.

Andrew: You bet. It’s been wonderful, thank you all for being a part of it. Bye everyone.

Master Class Toolbox

Transcript

Andrew: This session is about profitable ad buying. It is led by Justin Brooke. He is the founder of IMScalable, a digital ad agency that specializes in supplement companies, software companies and info publishing companies. Very competitive fields and he is out there buying ads for them. That is why I invited him to teach. My name is Andrew Warner. I am the founder of Mixergy, where proven founders like Justin teach and I invited him here to teach us how to buy ads. Here is what we will be talking about today. There is the big board of ideas. But Justin, before we officially get into this, this is you. Kind of a grainy photo in the mid 2000’s. You don’t look very happy at this photo. What was going on in your life at that point that made you scowl like that?Justin: I’ll tell you, of all the photos ever taken in my lifetime, this is the only one my brother has hanging up in his house. He loves this photo. Man, this was a hard time. I was working at Wendy’s and I was working at Wendy’s because you can get a little bit of free food. I could barely afford to eat and I had the moped because it only cost me like $1.50 a week in gas and I also thought it was kind of cool. I did like riding the moped. But that was my life back then, flipping burgers, driving a moped.Andrew: And then you went and you did an internship that turned everything around, right?Justin: Yes. I went out to Idaho and I worked with an information publishing multi-millionaire and I learned the ropes there. I landed the internship by showing him that I was the hungriest guy and I was going to go out there and really work for him and my job out there was to . . .
he had this and he still has it, very, very, he is kind of known for his marketing library. At that point he had already spent $125,000,000 on his marketing library. Every book, every course, seminar recordings, DVDs, all kinds of different things in there. My job was to watch, consume, all that stuff and write affiliate reviews. It was an affiliate review blog. It was creating so he could make some money back off of those courses so I got the education of a lifetime and it was an unpaid internship so I wasn’t being paid to do all this but I did get the education of a lifetime while I was out there.Andrew: And Justin, as a result of that, you left. You went to work for yourself on your own products. A year later, where were you? You’re no longer working at Wendy’s. You are no longer working for him for free. Do you have a sense of your revenues that you can share with us?

Justin: Yes. So when I went to him, I think my online stuff was making $300, $500. I was paying a bill or two with my online stuff so it was real at that point but it was nowhere near a business. During the internship I was making about $1500, $2000. If we fast forward a year after that, I don’t know the exact figure a year after that moment but when I got back home I spent the last money that I had on advertising and I had turned that into a six figure business by the end of the year. So I went in early 2007. By the end of 2007 I had a six figure online income stream. I don’t know if it was a business yet but it was a great income stream.

Andrew: So Justin, I’ve got this big board of ideas that we are going to be covering; there it is on everyone’s screen right now but I’ve got to acknowledge something or ask something. You seem a little nervous. What’s going on? You are usually a very confident person, you’re in charge. I know that you’ve got a lot going on today. Do you want to just talk a little bit about it? What happened before we officially started?

Justin: Yes. I am a little flustered. I wasn’t on my game. Usually I am very prepared for things. I didn’t have the lighting set up right. The mike wasn’t set up right. We just landed our dream house. It is a 6 bedroom house. 3 quarter acre backyard. A pool with a built in hot tub, 3 car garage, 3 AC units just to cool this place down. Literally, like 45 minutes ago I was just approved so I was just a little spaced out.

Andrew: Congratulations.

Justin: Thank you.

Andrew: I caught you after that and we were thinking maybe we shouldn’t record today but I like this energy. I like that you are in a positive place right now and I think it is indicative of how far you’ve come from the old moped days.

Justin: Absolutely.

Andrew: All right. So let’s get back to the big board. There it is. Here are the big ideas that we are going to be covering and the first one is to create tighter targeting segments for more relevant ads. Now you had a client who, I think they did business consulting, they wanted you to use pop-up ads for them because they heard some guy did well with pop-up ads. You suddenly took over this campaign and you saw that their cost per lead was $51.00 bucks. How is that? Is that a good cost per lead for them or is that painful? What is going on there?

Justin: It was so bad I almost got fired on the first campaign that I ran. He had heard from one of his friends in the industry that they were generating leads for under $1.00 using these pop-up ads and targeting competitors.

Andrew: So someone else had done under a buck and then he hired you and you are coming in with over fifty times more expensive ads.

Justin: Yes and so that first report I brought to him, it said the leads were over fifty-something dollars each and I said wait, just give me another shot because that first time I had kind of done what everybody says you should do. I didn’t really think it made sense but that is what everybody said you should do.

Andrew: What did everyone say that you should do that you did that was a mistake?

Justin: Everybody said that you should scrape all the possible URL’s. You find every URL. That is how you target pop-up ads. It is based on URL’s that people visit so you would scrape thousands of URL’s and they were showing one landing page for all these and what I did differently though . . .am I jumping the gun here a little bit?

Andrew: No. Let’s talk about you then created a tighter targeting segment that allowed you instead, well actually one more question.

Justin: Okay.

Andrew: When you said buy pop-up ads by scraping [at], who is selling you these pop-up ads on websites that you pick?

Justin: Yes, so that is another thing I want everybody to understand. These were not like malicious pop-up ads that you get with virus or malware. You buy these through a reputable ad network. It is called [Traffic Fit.com].

Andrew: Okay.

Justin: These people wanted some sort of free entertainment online, whether it was to play games or watch TV series online and in exchange for that free content they gave the ad network permission to show them relevant ads and they are relevant.

Andrew: All right and whatever you are about to teach us is applicable, whether we are using that service or any other service, right?

Justin: Yes, you can apply this and this is going to be the theme here. You will see that I’ve applied the same lesson on every ad networking campaign and it just keeps working.

Andrew: Okay. So instead of scraping what did you do?

Justin: So we still scraped but we scraped a little smarter. Instead of just going out there and mass collecting every YouTube URL and blog URL, just all these different URL’s, instead we strategically built groups of these URL’s. Instead of just having one big mass pile of them we created themed sections so these were software sites, these were books, these were blogs, these were forums that [were in the industry]. So we created these tighter campaigns. Instead of having a big bucket of them, we had smaller buckets and then we [??] a relevant landing page to that bucket. So that way, it wasn’t just one landing page to 2,000 targets. It was one landing page to 5 targets and then we would create another landing page for the next 5 and then another landing page for the next 5 so it was relevancy that really skyrocketed the results.

Andrew: So Justin, if I understand you right, then that gave you the ability to do two things. First, increase conversions because if someone sees a landing page that’s more relevant to the page they were on before, they are more likely to convert because they connect with that page. Second thing it seemed to have done for you and you correct me if I’m wrong is it allowed you to see not an overall cost per lead which was went you first went out there was $51.22, but it allowed you to see lots of different cost per leads and you can see one bucket has very expensive cost per leads, another bucket has very inexpensive cost per lead and you can get rid of the ones that are too expensive and focus on the ones that are and as a result .. . first of all, did I get that right?

Justin: Yes, absolutely. Spot on.

Andrew: And as a result of that, what happened to your numbers?

Justin: I believe we dropped it from fifty [two or to] . . . I don’t remember the exact numbers. I think I sent you guys screen shots.

Andrew: Yes. Let’s take a look at those screen shots right now. Here, I will bring up . . .

Justin: Yes, so there it was.

Andrew: [??] shot, right. We are talking about very expensive ads.

Justin: Yes. It was $51.00 per lead basically and then we had dropped it down I think to $3.00 or $2.00 per lead using just that strategy there.

Andrew: And so afterwards you got down to $3.20 . . . actually, here is what it is. You got down to 3.2032.

Justin: Yes.

Andrew: So it’s just over $3.20 per lead and that’s the result of narrowing your buckets.

Justin: Yes, and if you’re looking at the cost of the stuff, I was keeping things pretty low right now because my neck was on the line and I really had to make sure that I was playing it safe. But yeah…

Andrew: You weren’t playing it bad actually. So if we’re going to pull that up, what we’re seeing here was you didn’t even spend 100 bucks?

Justin: No. Yeah, no not even 100 bucks.

Andrew: Not even 100 bucks, so in this case actually it’s at first you were spending 205 bucks and then afterwards your cost went down on a daily basis to about 32 bucks. Did this continue to work as you expanded?

Justin: Yes, yes it did and you know one of the other things is we were getting some of the leads, like you said, some of those buckets were lower, some of those were higher. You know, some of them were as low as 16 cents per lead and he really wanted it to be under a dollar but I told him you know, listen, there are some of these buckets, it’s a little bit more expensive, but they’re sending us tremendous volume compared to the 16 cent per lead where it was like one lead a day. One lead a day is okay, but for 3 bucks a lead we were getting like 50 leads a day from that one bucket.

Andrew: Gotcha. All right, let’s go back up to the big board.

Justin: Okay.

Andrew: There it is. The next line is, oh we should have had a way to highlight it, but I’ll just read it out. Prequalify your visitors to increase your sales conversion. There Justin, you had a client who had a weight loss pill – green coffee beans.

Justin: Yes.

Andrew: That’s what it was. They needed you to acquire customers below 90 dollars per customer, but that’s a pretty considerable amount of money.

Justin: Yes, and at this stage in my career, the other campaign I was actually working for, so I was a W-2 employee at the time and this one, you know running my own agency I’m thinking I’m a hot shot here. I thought I had everything nailed and life taught me another lesson on this one. So you want me to just give you the story on this one?

Andrew: Yeah, what happened there?

Justin: So I went and I made an ad just like I normally would. You know, it had a picture of a happy woman. I mean if you think of the audience for a green coffee bean weight loss pill, it’s female audience, young, energetic kind of audience, at least this is what I thought. Then, for a Facebook ad, you know it’s pretty well known that if you have a bright colored background, that will help you attract attention. So I had a happy, energetic, healthy-looking woman with a bright background, thought I was doing everything correct. However, you know when I came up with the numbers, we were way over target. We were not meeting the 90 dollar CPA and so I told the client, I was like you know, I’m doing everything right on my end, you must not be doing something right.

Andrew: So you went back and blamed the client?

Justin: Yeah, I did not say it in those words, but I made it very politically correct, but yeah that’s basically what I was pointing at was that there was no conversions and that’s why it wasn’t working. However, that was when he let me know that I was one media buyer among many and all the other media buyers were meeting the goal and I wasn’t, so I was the one that was wrong.

Andrew: All right. So then you have to go back in and prove yourself. You’re not going to lose to all these other media buyers when they’re running the same campaign. So what did you do?

Justin: Yeah, yeah. He said that you know, he liked me and he heard good results so he was going to give me another shot and so I went back and this time again I thought back to increasing relevancy. So they want you know the offer is a green coffee bean…

Andrew: Yeah.

Justin: The ad should probably show a green coffee bean somewhere inside the ad and instead of saying, yeah I think you have the ads there I think…

Andrew: Yeah, you want to take a look at them specifically?

Justin: Yeah, I don’t remember them specifically, but…

Andrew: There they are. So the top one is the one you were told you’re supposed to do woman because you’re reaching women, bright background to get people’s attention and it got a low click-through rate, low sales, but that’s what you did at first on Facebook. So then the next one is, hey, a green coffee bean. If that’s what we’re selling is a weight loss pill, green coffee beans, let’s feature a green coffee bean. We see that the average click-rate then increased and so did the return on investment, the ROI 200% increase.

Justin: Yes, and the real big thing to notice about these three different ads is the one in the middle, obviously that’s the one that one. The copy is about the product and it shows a benefit. It’s also a little curiosity, you know discover the weird weight-loss bean that lowers blood pressure and increases energy. Weird weight loss is the curiosity, blood pressure and increased energy is the benefit. And we then we are showing a bean so the person that is clicking on this already wants that product. Now they are just trying to find out . . .

Andrew: I see. I take it back. I misunderstood. So, on the green coffee bean, the click through rate was average. It didn’t increase. It was just the average click through rate but when people clicked over, because they were pre-qualified and understood that what they were getting was green coffee bean that would help them lose weight, they were more likely to buy which meant that overall your return on investment went well.

Justin: Yes, yes. It was framing that visitor correctly so that when they landed on the sales page, they were already wanting the product. The sales message just had to slam dunk the ball at that point.

Andrew: Got you. All right, that makes sense and then, talk to me about C, the last ad that you bought.

Justin: So C, I had heard from some buddies of mine and I had done some research on some banner ads using tools that you can spy on campaigns and whatnot. They were all using these kind of angles where they were showing either dissections of muscles or dissections of bellies and it creates a lot of curiosity. It almost tells a story and you want to click on it because you want to see what that picture is all about and what had happened there is we did get a lot more clicks and much better CTR lower price clicks but they were just curiosity clicks. They weren’t framed right when they got to the page.

Andrew: I see. All right, yeah, I could see myself clicking on that just to see a bigger version of the image that is in the ad labeled C and once I am there, I have no interest in coffee beans. I have no interest in weight loss necessarily.

Justin: Right.

Andrew: That’s what you are talking about.

Justin: So yes, it’s not about getting a lot of clicks, it’s about getting a lot of customers.

Andrew: Okay. And a big point there is you want to pre-qualify your visitors if you want to increase your conversions. It’s not just about increasing clicks. Pre-qualify them means often you will reduce your clicks but the clicks will be more powerful. All right, since we are on the big board right now, let’s take a look at the next item. Number three on our list is to test lots of segments and ads to identify the top performers. You did this on Facebook.

Justin: Yes.

Andrew: People load up a bunch of interest on Facebook. They create a couple of ads with all these different interests. Talk to me about that and how you did traffic hail Mary.

Justin: So the traffic Hail Mary is what I believe most people do when they are starting out. They start a campaign. They say, I’m going to spend $100 or $500 or whatever your budget level is. You are going to spend some money and you are going to see if this new traffic network everybody is talking about works. And so they scrape together an audience of every possible person that might want their product and they have this huge audience and they have this budget and they spend the money and they don’t get a ROI and so that’s the traffic Hail Mary. It’s kind of like, they’ve thrown the ball out there . . .

Andrew: You are seeing any possible people who want to buy from us. Let’s load them all up into, in this case it would be Facebook. In this case, it might be, hey, I’m running Mixergy. I should be targeting people who are into startups and people who are fans of hacker news and people who are fans of startup stock power and all those insights. Even Justin’s fans and that’s what you did. You called that the traffic hail Mary. That does not work.

Justin: Yes. When you spend the money and you pray that it is going to work. You make traffic profitable. Traffic isn’t profitable. We don’t all just get to go write a check and then traffic is profitable. It’s not like a lottery system. You make it profitable.

Andrew: Okay. So you had a client, speaking of, since we were talking about supplements earlier, you had a client who offered health supplements for women. The client was spending $110 per customer on Facebook. Their goal was to spend $70 per customer. What did you do?

Justin: Yes. So instead of just creating that big giant list of people, we created a lot of segments and a lot of different ads which allowed us to test. Okay, these are people who are fans of celebrities that are relative to this product. These are people who are fans of books in the industry that they might be reading, software that they might be watching. TV shows, all these different segments, all these different ads and ideally it was about 150 different ads total if you combined everything up and then . . .

Andrew: You are saying you created 150 different segments and an ad for each of those 150 segments.

Justin: 150 ads, I think there was maybe 10, maybe 15 segments.

Andrew: Got you, okay so each segment got multiply ads.

Justin: Yes, same as each segment, but multiple ads in each segment that way we [??] the same messages. With just different audiences. And so we let all that run and then we identified, okay this segment works, that segment doesn’t. This ad works, that ad doesn’t. And it’s that second round when you spend money that’s where you make money.

The first round you’re going to the data store and you’re buying what data is true and what data is false. You get rid of all the false stuff, you spend all the money back on the good stuff and that’s when you start getting ROI. And that’s what people aren’t doing. They’re just doing that first round, and saying, Facebook doesn’t work.

Andrew: I see. So is there certain number of ads segments that you’d recommend that we start off with? A number of ads designs that we would have for each of those segments?

Justin: Yeah, in our company, our policy is our standard operating procedures is we start with five ad segments and three ads in each of those segments.

Andrew: They don’t have to be … it could be a total of three ads and five ad segments?

Justin: Yes, that’s what we start off with. And if they have some other creative ideas or they have … then they can create some more, but that’s our starting point.

Andrew: Okay. Let’s take a look at the vision, I’ll bring it up on the screen for the audience to see. What are we looking at here?

Justin: Okay, this is the screen shot of the sales, the clicks that we were generating, the sales, the checkout column is sales. And then the cost per check out. Now generating sales for him at an average of about 40 bucks. Some of them for 30 some of them for 56. You know, and doing quite the volume of sales as well. Our cost per click was gorgeous.

Andrew: That click through rate is anywhere between 5.6, yeah, 5.6 and 6.8 then we see the number of clicks that went to the site, that’s what the boom is about you got clicks to the site, check outs anywhere from 172 to 340. And now you see cost per Website hit, cost per checkout, boom you went from $110 to what is it mid 30’s you said overall.

Justin: Yes, from 110 down to the 30’s lots of high fives, you gave us more budget we charge of a percentage so that client giving us more budget is great, because that means we make more money. The other thing that I really would want to point out about that image Andrew is…

Andrew: Let’s bring it back up.

Justin: If somebody does the math on the conversation rate there, most people would killed this campaign because the conversation rate was actually pretty low. I’m not great at doing math on the fly so I’m not going to try. But if they did the math there, there should be more sales with at least the 1% or 2% conversation rate.

Andrew: What are we looking at? You want me to do, oh I see the number of checkouts is a percentage of Web clicks. Is that right?

Justin: Yeah.

Andrew: If we take 340 we divided by 110 903 that’s a top line and we end up with less than 1%, a third of 1% conversation rate from hits to the site, to orders. So you’re right that does seem less than 1 would shock some people.

Justin: Yeah, they would turn that off. But this is a six figure per month campaign for the client right now.

Andrew: Wow. All right. Let’s go back to the big board, there it is. Next, one is that center item right there. We’re going to optimize bidding strategy to match our goals. Talk to me about that. You worked with a client who teaches lawyers?

Interviewee Yes, okay I remember this one now.

Andrew: I know who this is. This is someone who I had on Mixergy. It’s Alexis Mele [SP], right?

Justin: Yes, it is, it is. So she wanted leads, that’s really what it’s all about for her. For someone who sells the lawyers, having a lawyer on your list is very valuable especially if your teaching them business coaching.

Andrew: That’s what she was doing. She’s a business coach for lawyers she wanted more leads, she need her cost to be under 10 bucks per lead.

Justin: Yes. We were struggling doing that with the normal bidding strategy, which is CPS cost per click. That’s what everybody was reading about on the Internet at that point is, you know, being able to pay per click. However paying per click we weren’t able to meet her goal of $10 per lead. When we switch the bidding over to optimized CPM, and then we were optimizing based on lead conversations and these are all setting that you can do inside of Facebook. When we made that change, I think we dropped down her cost from being all the way down to the $2 and $3 range.

Andrew: By paying, you are saying paying per impression [CPM] versus paying per click, you were able to reduce it.

Justin: Yes. So most people will pay per click because they don’t want to pay if they are not getting someone over to their website and with all that was right. I mean, that’s what most people should do.

Andrew: Makes sense. Yes.

Justin: Yes. And sometimes we start out that way but as soon as you have a good ad that you know is going to get a decent click through rate, if you switch that over to CPM you can often really reduce the cost per click. There is some math involved in that. For example, you may be paying .50 per click. That means you are paying $1.00 for 2 clicks. Well, let’s say you are paying CPM and you are paying $1.00 for 1,000 [views] well if you get 4 clicks in that 1,000 impressions, then you’ve just dropped your cost per click down to .25.

Andrew: I get that. Are you suggesting that we start off that way? If a cost per click ad doesn’t work then we should start paying for impression or are you saying if we have an ad that just starts to tear it up we should consider not buying per click and switching to per impression.

Justin: Yes.

Andrew: Only if it works.

Justin: Right. Only if it works. Then switch it over to CPM [bidding] because the risk of CPM is that you are not going to get any clicks because with CPM you are paying for impressions, not clicks, but if you have a good ad that’s getting a decent click through rate, switch it over to CPM because you’ll almost every time, drop your cost per click which will drop your cost per sale which will increase your [RY].

Andrew: The ad that she had that did so well for her?

Justin: Yes. This was one of the ones that did so well. There was another one that was a close-in on her face. I call this the case study style ad where it doesn’t look very [adsey]. It looks like you are introducing yourself to the market and it showed creditability by having her on a morning show. And so yes, when we switched it over and that’s the other thing, it’s not just CPM or Facebook, it is optimized CPM which means that they will optimize on an action that you tell them you want more of. So when we told them optimize for leads, and that is through the Facebook conversion pixel, then it was optimizing ‘show the ad to the people that it knows will or are more likely to opt in’ because Facebook has all the data in the world on us.

Andrew: I see. All right. Let’s go back up to . . .

Justin: I just wanted to make sure I made sense on that.

Andrew: I think you did, absolutely. So I get the strategy. First try pay per click. Ad does well, you can switch to CPM and when you do, tell Facebook what you are trying to accomplish with your ads that you are buying on CPM or per impression basis. If you do that, then your cost will go down and that is what you did for Alexis. Do you remember what the overall numbers were? Actually, here, I’ve got them. Justin switched his bidding strategy. Dropped cost per lead according to my screen, somewhere between $3.00 and $7.00 and her goal was under $10.00 so that is how powerful this was.

Justin: Yes. So some of the ad segments we were doing were in the $3.00 range and some were in the $7.00 range and we kept all of those because they were under budget.

Andrew: What is the minimum amount that someone needs to spend in order to work with your firm?

Justin: $10,000 a month.

Andrew: $10,000 a month in ad buys. And what is the highest that a client has paid?

Justin: So far, $100,000 a month.

Andrew: $100,000 a month.

Justin: Yes. I was a little nervous closing that sale.

Andrew: Is that the client that paid for the new house?

Justin: No. No. No. We’ve gotten quite a few clients now but that was the big one. We were doing well for them at that lower level and then they said, hey, we want to spend a lot more.

Andrew: There’s that right there [IAMSCALABLE.com]. We are going to continue and do more but, wow. All right. You’ve got case studies where you break this down and let people see how you’ve done it.

Justin: Yes.

Andrew: Oh, there it is actually. There’s the site. I’ll show it to them. All right. Why don’t we go back to the big board? Let’s bring it up. Now we are going to talk about retargeting. Retarget only, only you say, your most qualified visitors. What’s the mistake that most people make though, Justin?

Justin: You know, it comes back to the same thing. We all keep making the same mistake with every new traffic method. So with retargeting, the first thing people do is they treat it like list building because they realize they can build this big list of people who they can retarget so they put the retargeting code on all of their pages because they want to build . . .

Andrew: Okay. I am going to buy ads on other sites that will hit anyone. It will be shown to anyone who is on any one of my pages and that is the mistake that most people make and you don’t want us to do that.

Justin: Right. I did it. I did exactly that.

Andrew: Okay.

Justin: Let me make the mistakes for you. So, we did that initially strategy, and we said, ‘OK, this isn’t working. What we need to do is go back to the same thing that has worked for us over and over again, Increase the relevancy’. So, instead we took the pixels off of all the pages, and we said, ‘what page has the absolute most qualified people for us to show these ads to?’ That’s the order form page.

Andrew: Okay.

Justin: Then we went through the sales process to the point where they click the “add to cart” button, and they landed on the order form, and they didn’t complete the sale. They were interested at one point. They were more interested than anybody else on any of our other pages. So what we did was, we showed ads to those people, and then brought them back to the website, and every single time we have done that currently, it’s been in the 200 to 300 percent on RYs. This is the first campaign we do when we start retargeting. We start there, and then we start broadening from there. We use it to reduce shopping cart abandonment first, and then we back it out to, ‘ok, these are people who have become a lead’, and then we bring it out to, “Ok, its working amazing, let’s just target everybody”.

Andrew: So if I were going to buy an ad for the first time, or someone listening to us were going to buy an ad for the first time, what your suggesting they do is retargeting ads before anything else?

Justin: Yes, if you have traffic. I mean you have to have traffic.

Andrew: Okay, retargeting before anything else, assuming you have traffic, and only target people who have visited your shopping cart. That’s the easiest win. What is a site that we can go, to buy retargeting ads that you recommend?

Justin: The one that I recommend is PerfectAudience.com.

Andrew: What is it? Perfect audience?

Justin: Yes. I really like them, They have a great user…

Andrew: I’m bringing them up right here, on this monitor. This is where you recommend we buy the first group of people?

Justin: Yeah. If you do a little bit of Google searching, they usually have, like $50.00 free to start with, or something like that. Great interface, lots of good options, lots of flexibility in the way that they allow you to retarget and ideas for campaigns. They can retarget into Facebook, Twitter, out on the web. Very cool company.

Andrew: Alright. That’s great advice then. Alright, why don’t we then go back to the big board, and the next big topic for us to cover. Use Twitter cards to triple your engagement. So far, we have talked a lot about buying ads on Facebook, and some about buying ads on the general web, but Twitter cards have done well for you too.

Justin: Yeah. Most people don’t realize what they are. They probably have seen them, but they don’t realize what they are.

Andrew: There it is. On the left, no Twitter card. On the right, with card. What should we be paying attention to here, and noticing that is different before you teach us how to do this?

Justin: The biggest difference there is the amount of use space that you get. But, also the biggest difference is the amount of clickable space. I can click on that entire image. There is a read more button and the headline is clickable, instead of it being just a link in the other tweet.

Andrew: Right. Alright, so how do we do this, and what have you done that’s worked so well for you?

Justin: So with Twitter ads, it’s really not a…one thing I want to say is that Facebook is getting all the attention right now. If you like Facebook, if you have a campaign that’s working good on Facebook, move it over to twitter and do both of them because it’s very very similar. Facebook has custom audiences, twitter has tailored audiences. That’s how similar they are. They are really kind of copying each other.

Andrew: Can you say that again? What was the statement?

Justin: If you have a campaign that is doing ok in Facebook…

Andrew: And take it to twitter?

Justin: Yeah duplicate it over to Twitter because very similar targeting options and biding options. It’s very very similar. It’s a great way to double your traffic. Probably your RY as well. So the big thing with Twitter is, it is more expensive than Facebook. You pay on cost per engagement, and an engagement could be a click on your profile, a retweet, a follow , a favorite, a click. You could pay for all these different things, so…

Andrew: Do we get to pick what kind of engagement we want on this ad? So, can we say, I’m willing to pay only when someone clicks and comes over to the site, in this case its IP.Imscalable.com?

Justin: No, you don’t get to pick. But they did just release kind of the same feature that Facebook has, the optimized CPM. So if you do want to focus on website clicks, then it’s CPM bidding, but they will optimize it to show to more people who have a tendency of clicking on ads more often than showing to people who have a tendency of just following people more often.

Andrew: I see. I think now is a good time to say that all of these tactics that we’re teaching are ways of illustrating bigger strategies, bigger ideas. That if your big takeaway from this is that you should only buy this ad and only buy the way that it’s available today, the day that we recorded, you’re going to date yourself and you’re going to be outdated and obsolete very quickly. If you take away the bigger understanding, which is everyone is focused on Facebook only and you should be looking at Twitter, the bigger idea, which is in Twitter you can get more real estate than most people are aware of. Those bigger ideas are going to apply throughout no matter what changes they make.

Justin: Absolutely. So I think we had- I sent your assistant the numbers, but we had about a 1% click-through rate with no card and as I was watching Gary Vaynerchuk videos, he always kept talking about Twitter cards. I knew him to be smart and he knows his thing, so I was like, you know there must be something to these cards, let me go try that out and so I did and I got almost a 3%, I think a little bit higher than 3% actually with the cards.

Andrew: With the extra real estate right there.

Justin: Yeah, yeah the extra real estate tripled my click-through rate, which allowed me to get a lot more clicks cheaper, which dropped down my cost for acquisition. It fixes everything.

Andrew: All right, let’s go back to the big board and let’s see what we’ve got coming up next. This is the final point – leverage device bid adjustment and enable enhanced CPC. What are those?

Justin: Okay, so this is in ad words this time, in Google AdWords network. So what you want to do? Do they have a screenshot for this one?

Andrew: Yeah. Yeah, let me bring up that screenshot for everyone.

Justin: Okay, so what you want to do

Andrew: No, this is not the dentist.

Justin: Yeah, it is actually the dentist.

Andrew: And the dentist is, I see, targeting by device. Okay, so what happened with the dentist?

Justin: Right. So we were targeting, you know, key words, but what we realized was that this specific client, they need phone calls. They don’t really care about website clicks or leads, they care about can you make my phone ring and what better person to have clicking your ad than somebody who is with a phone in their hand already. So that’s why we optimized this campaign to show more on mobile devices than on desktop or tablet devices. So what you’re able to do here in Ad Words, if you focus on the middle column there just after the device titles it says 200%. So what that means is – I think our average bid is 10 dollars because this is West Palm Beach cosmetic dentistry super, super competitive. We said, when it’s somebody that’s using a mobile phone, increase our bid 200% because we want that person more than anybody else.

Andrew: I see.

Justin: And then if it’s somebody that’s on a computer or tablet, then we’ve actually now since then reduced it. We now tell them reduce our cost or our bid by 50% if it’s this person because they’re kind of still valuable, but really all the money is coming from the mobile devices in this campaign.

Andrew: Okay, and that’s device bid adjustment and that’s the third column that we’re seeing there, the one that has the 200% in it. What about enhanced cost per click? Enhanced CPC?

Justin: Yes, so enhanced CPC is basically Google Ad Words fighting back with Facebook and Twitter. You know, Facebook and Twitter have the ability for you to optimize for an action that you want and so enhanced CPC basically tells Google we want to optimize. I don’t want just any click, I want you to optimize for the clicks that are returning the calls. So it takes a little while for it to build a profile of the different people, but as more people are clicking the ads and calling, it then can start showing your ad more often to people who are more likely to call.

Andrew: Ah, gotcha. So with enhanced cost per click, we end up getting better clicks, the clicks that we tell Google are more valuable to us.

Justin: Yes, yeah you pick a goal and then you tell them, you know I want you to enhance our CPC to show more of these people. Basically it raises and lowers your bidding based on the type of people you want.

Andrew: All right, there it is. These are the big topics that we’ve talked about today. Giving people a lot to work with here. We focused on Facebook, Twitter, and Google Ad words in that last topic, but these ideas will work beyond those services. If anyone wants to follow up with you, your site is imscalable.com where they can read some case studies, see what you’ve done for others, and I like the blog too.

Justin: Thank you.

Andrew: I’ll pull that up right there. Cool. All right, thank you so much for doing this.

Justin: Thank you for having me on, man. It was my pleasure, my honor.

Andrew: What are you going to celebrate tonight the new place?

Justin: I don’t even know right now. I’m still kind of just mind blown about it all, so I’ll figure something out to celebrate.

Andrew: Congratulations. Thank you, Justin. Thank you all for being a part of it. Bye everyone.

Master Class Toolbox

Transcript

Andrew: This session is about how to find a quest that will bring purpose to your life. The session is led by Chris Guillebeau, an entrepreneur and adventurer who visited every country in the world, 193 in total, before his 35th birthday. He’s also the creation among other things, unconventional guides who’s guides include empire building kit, about how to build a business in one year by doing one thing every day, and travel hacking, which shows you how to earn hundreds of thousands of frequent flyer miles. The conversation he and I are going to be having is based on this, let me bring the camera to me and show it; based on this book, The Happiness of Pursuit. We pulled out a few ideas that we’ll be covering. My name is Andrew Warner, founder of Mixergy. I’ll be helping facilitate. Chris, good to have you on here.Chris: Hey. Great to be back, Andrew, and hello to all the freedom fighters.Andrew: Yeah, thank you. Hey, I want to ask you about your story, but why don’t we start off with this woman. There she is. This is Sandy Wheaton. She was brought into an office and told what?Chris: Sandy Wheaton is a Canadian who is working in Detroit for General Motors, and she’d been working for them for long time, a number of years, and she was brought into that office along with a number of other employees, and was given some bad news. She was given the news that there was no longer a job for her, and that she had done a great job but that the company no longer was able to provide for her, was no longer able to issue that regular paycheck, no more benefits, etc. And, she had to leave right away.

Andrew: Leave the company for many people would mean, be a disaster. What did she end up doing instead?

Chris: Yeah. I mean, at first that was her thought, is, ‘This is a disaster and I am a career employee and all I know how to do is to work in this security of this kind of company,’ and especially at that time, with lots of other folks being laid off, that at GM she noticed that all of her colleagues kind of went into this panic mode and started thinking, ‘I got to contact everybody that I know. I need to go on LinkedIn and do some stuff. Really got to start sending out my resume.’ And, she decided to do something a little bit different and she hit the pause button, and she said, ‘You know, maybe I should actually use this time to think about what I really want to do for myself. I’ve spent a number of years, something like 10 years, essentially giving my life over to a company, and maybe I don’t regret that, maybe I do. Who knows? That’s in the past. Here I have this moment. Let me think about doing something for myself.’

Andrew: And what did she end up doing?

Chris: She had always wanted to travel on America’s Route 66. She was an amateur photographer and she decided to set out on this quest, camping along the way and taking, I forget, how many hundreds of thousands of photos, and just kind of going through this whole journey for herself. And, she decided to do that before looking for another job. She did eventually, of course, want to work again, but before she did that, she wanted to fulfill this lifelong dream of traveling, meeting people, and documenting her photos.

Andrew: As a result of it, from what I understand, she started to get lots of offers to speak, people wanted to hear and learn from her, she got on the cover of Prominent Art magazine. I’m looking here at my notes. She started leading groups through Maritime Provinces. So really, instead of being in General Motors, where all this creativity was stifled, because of her quest, creativity just came out of her. She had a much better life. And, that’s what we’re going for here, that kind of quest.

Chris: Yeah, absolutely. So, the external consequences were eventually very favorable, as well, as you mentioned, she created this whole new career, whole new life, that was a lot different from just going to work from maybe Ford Motor Company down the road, or something. But also, in the beginning she talked about how comfortable she felt, how empowered that she felt by pursuing this dream, and she said, ‘Even if the external consequences are not amazing later, I’m so glad that I did it. I’m so glad I did this for myself. I’d always wanted to do it, I knew I would regret it if I didn’t.’

Andrew: Yup. All right. And, that’s our goal here for today. I know it’s easier said than done. How do you find what your mission is, how do you decide what the first step to take is what do you do to keep from giving up along the way, and so on. That’s why we pulled up all these ideas directly from the book that we’ll be discussing here today. But, before we get into the specific how-to’s, Chris, I mentioned that you decided that you were going to see every country on the planet before your 35th birthday. What set you off on the path to do that?

Chris: Well, I had always liked to travel. I had been a traveler and I have worked overseas in West Africa, and had been to a bunch of countries, and I was also a list maker. I liked to write things down, and so one day I found myself writing down all the different places I’d been, and I said, ‘Huh, that’s interesting. It would be fun to combine this love of travel with my love of goal setting, and have a project. At first I thought it would be 100 countries. I thought it would be awesome if one day in my life, I could say I’ve been to 100 countries. So, I started working toward that, and then eventually I realized it wouldn’t actually take me super long to do that, and it also wasn’t super hard, because if there’s 193 countries in the world and my goal is just to go to roughly half of them, I could kind of pick and choose which countries. So, that’s when I decided to set a goal of every country in the world. And then, I think every good goal has a deadline, so that’s why I gave myself the deadline of my 35th birthday, which was 8 years ahead at the time.

Andrew: 8 years ahead. How old were you when you hit them all?

Chris: Last year on my 35th birthday–

Andrew: Wow. Right on time.

Chris: I arrived in the final country. Yes.

Andrew: All right. Let’s get into the how-to of it, and the first step that we’re going to be talking about today is to pay attention to your discontent, to your passions, to your problems. In your book – I love the name by the way, The Happiness of Pursuit – In the book, you talk about Tom Allen, a guy who just was about to graduate and something happened to him that a lot of graduates hope for. What happened?

Chris: Oh, he was offered the job of his dreams, essentially. He interviewed really well, it was his company and he was young, up and coming, and like, ‘This is going to be my first big job,’ and he found himself in this strangely uncomfortable situation in a sense that the interviewer called him back and said, ‘Hey, we want to offer you the job.’ And, he wasn’t excited about it all of a sudden, and he said, ‘Do you mind if I just think it over a little bit.’ The interviewer said, ‘Okay, sure, whatever.’ He just realized maybe it actually wasn’t the job of his dreams, or at least it wasn’t the life of his dreams that he wanted right at that time.

Andrew: One of the things you say is that he felt that he was just sick and tired of other people being in control of his decisions. I know having gone through school that that is what life was like every day. Someone else making decisions for me and every ounce of creativity they were going to stifle. Why do you want to sell candy in the school? Why do you want to read other books beyond what we’re giving you, and so on; I get that, not wanting that life to extend into your first job, no matter how ideal it is. So, that’s the discontent. What did he do with that? That’s not enough to just say, ‘I don’t want people to tell me what to do.’

Chris: Absolutely, absolutely. So, a lot of things began with this content, which again doesn’t mean that you’re miserable necessarily, doesn’t mean you’re terribly unhappy. It just means maybe you’re a little bit unsettled and you want something more, and that’s what we saw with Sandy. Tom’s situation was the same. He always wanted to cycle the world. His dream was, I would actually like to go out on my bicycle and just leave England – that’s where he was from – head south, go to Eastern Europe, maybe even go down to Sudan. I want to go on this mission of self discovery. I’m not even sure where it’s going to lead but this is what I want to do. So, he combined discontent with inspiration essentially. He was discontented with the idea of just jumping straight into this traditional way of life, and he combined the discontent with the inspiration of, here’s what I want to do instead. I would love to be out on the open road. Initially, he left with his friends, but then his friends returned to England. He continued on his own. He found his quest, essentially, which is what the book is about, by combining discontent with inspiration.

Andrew: Here’s the site where we got that image from. Is that him?

Chris: That is Tom. Yes.

Andrew: That is Tom. Way to go, Tom. These photos are beautiful. All right. So, he found his discontent and that led him to get out on a bicycle and explore the world, and through that, he’s living the life that he wants instead of the one that is basically an extension of the life where other people tell him what to do. Not everyone though, has an opportunity to travel, frankly, to even get out of the house on a regular basis. I just had a child recently and I know how tough that can be.

Chris: Sure, sure. Of course.

Andrew: Just going to see my friends is a problem at times. That happened to this woman. Let me bring Sasha up on this [right here]

Chris: That’s right. There she is.

Andrew: I think sometimes just getting to see a person gets you more connected with her. There’s Sasha Martin. She felt entrenched in her life in Oklahoma. She had a six month old daughter, about the age of my child. What’s the challenge then?

Chris: Sasha’s story is one of my favorite ones from the whole book. Sasha’s experience was, okay what can I do? How can I live this life of adventure? She had grown up overseas and then she found herself in Oklahoma. Okay, I can’t visit every country in the world like Chris does or like somebody else is doing, like Tom is cycling. She had a background in culinary arts and so she decided to cook a meal from every country in the world. She turned this into a whole process and it was kind of a weekend thing. The whole week would lead up to it, and then she would document the recipes and post them online. She would play music from that country, serve this complete meal with appetizers and the main course, and dessert. Her young daughter essentially grew up with this international perspective for the first three and a half years of her life. Every week, she’s eating all kinds of different food. People from around the world started following along as well. She had this website, Global travel for global table adventures. She talks about the transformation that it’s made in her life. You know, she wasn’t able to cycle to all these different countries but she brought the world to her home in Oklahoma. She, you know even though she was busy, even though she had this young daughter you know time was limited, she found a way to bring the scope of adventure into her life.

Andrew: What a great headliner on there: ‘Global Table Travel, Let’s Eat Our Way Around the World; 195 countries, 195 meals, 195 weeks’.

Chris: Right. She even had three extra countries to make, which I was really impressed by. I was like ‘wow, I only had 193 countries’.

Andrew: What did you miss?

Chris: She just has a different counting system.

Andrew: I see.

Chris: You know, I use the UN member states and I think she added on Taiwan and some other territory or something.

Andrew: Makes sense. Did you get to eat your way through all of those countries or you someone who’s less adventurous about food?

Chris: I’m probably less adventurous than Sasha is, definitely.

Andrew: Alright. Onto the big board, the next thing we’re going to talk about is to make your large quest manageable by breaking it into small tasks. You did that… here’s the large quest, by the way I love this piece here. You know what, there we go there it is, a plan to see every country on earth by age 35, that one we ripped from The Year 2000, about four years before you finished.

Chris: That’s right, that goes back a ways.

Andrew: Yeah, so, that is a big challenge and you talked earlier about how it started as pieces. Can you talk a little more about that, about how you did it?

Chris: Yeah, so the quest became so much more manageable for me, or maybe not even manageable but relate-able and I could just kind of grab on to it once I started thinking ‘okay, yes there’s this big quest but it’s not like, you know, day one I begin and at the end of ten years I end’. There’s going to be lots of milestones along the way so I tried to focus on those milestones. I probably just say ‘okay, my quest for example, there’s all these countries, they’re broken up into regions you know I can probably combine a bunch of countries on different trips. I go on one trip I might be able to go to four to five countries. Just thinking logically and thinking linearly made a huge, huge difference and at the beginning of the whole adventure someone said something to me that they intended as kind of a criticism, they said ‘you know, this isn’t that complicated of a thing, anybody could do it, it just takes enough time and enough money’. So, at first I was offended as you always are, but then I started thinking about it more and I was like ‘okay, I can actually use this to my benefit this kind of thinking, if I think about how much time it takes, how much money is required, and what are the other costs, what are the uncertainties, what are the challenges? That’s actually going to benefit me’. That’s going to actually help me to achieve the goal.

Andrew: Do I have this right here? I’m looking at my notes, the estimated cost of scaling from 50 countries to 100 countries was going to be about 30,000 dollars.

Chris: That’s exactly right; 30,000 dollars you know to go to 100 countries. For me I was incredibly happy with that cost, you know, like obviously 30K is not a small amount of money. I never want to say it’s nothing, right? But, when I considered all the experiences, the value that I would get out of that, I was more than happy to spend that much.

Andrew: And that’s over, what, 5-7 years?

Chris: Yeah, that was over a number of years. You know, at the time like when I chose to make that investment I didn’t have a lot of money but I also have friends that were buying cars for 30,000 you know?

Andrew: Yeah.

Chris: Nothing wrong with buying a car if that’s what you’re into but for me I chose, you know I wanted to invest in this experience.

Andrew: What about this Chris to say ‘I want to go to 100 countries’ feels bigger than everyday life but doesn’t feel as big and epic as going to every single country on the planet. When you break down goals into smaller chunks and say ‘alright, I’ll go to 100’ doesn’t it take away a large part of the enthusiasm also? A large part of the sense of mission?

Chris: I don’t think so, I mean it’s a great question but it certainly didn’t for me. I guess for me it was a lot easier to get my head around a long term goal. I mean, I was still working toward that; you know, every quest has a destination. Every quest has an ending, and for me the ending wasn’t just the first batch of countries or whatever but I can still take pleasure in saying ‘okay, like every country in Asia completely wrapped’ you know, ‘every country in Africa’. Like I said, huge accomplishment by itself and instead of looking forward to the end but I guess it actually helps, for me at least, it helped me to really think of it in terms of a smaller task.

Andrew: You talked about the expenses… before we go to the next point what about the revenue from it? Is this, when we’re talking about a quest is it something that has to take money out of our pockets and be like a fun thing that we decide we’re going to spend money and time on or is there a way to make sure we do make back enough money and that we get the kind of reputation that you got largely because you went to every country and we all got to follow along with you and the same kind of big reputation as some of the other people in the book? How do we get to that?

Chris: Yeah, sure. Yeah, that’s also a great question because I think it’s a little complicated because I don’t necessarily think you should undertake a quest as a career move. I think you should undertake a quest if you’re super excited and passionate about something and you are willing to sacrifice to some regard, you know to achieve that goal or achieve that quest. When I say ‘sacrifice’ you know it’s not meant to be a heavy word but you know anything that really involves true adventure I believe requires some amount of trade off. You have to be able to say yes to this thing and say no to other things. In my case, I had begun the journey just from my own motivations, and I wanted to challenge myself. Nobody did follow me, I didn’t even have a blog or social media or anything.

Andrew: There was no sense right from the start where it was going to produce business results. People were going to read you more because of this. They were going to buy from you more because you’re a guy who did all this traveling.

Chris: No. Absolutely not. I’m fortunate that I was able to develop a career out of it. I think it’s great but I don’t think that was ever the goal. I think if it was strictly a business goal, and lots of great business projects – I’m an entrepreneur myself, so I’m pro-revenue – I guess if it was strictly a business goal, there would probably be a lot easier ways to make money than–

Andrew: Than to go on an epic quest.

Chris: Than spending 10 years, 10 years sleeping on the floor of airports and taking another trip to Central Africa, or going to the islands of South Pacific where there’s almost no internet access. I feel like there’s probably a better way to make money.

Andrew: Am I a big philistine for not just seeing the passion and the art of all this and saying, ‘Where is the money’ too?

Chris: No, there’s nothing wrong with money. Money’s great. A lot of people do have quests of building businesses, but I think maybe a quest has to be a little bit of a higher level. There has to be a greater passion or purpose behind it, and I think many of the great entrepreneurs, no doubt including some that have been on Mixergy, they have that passion. They do very well for themselves. They have a lot of revenue, but they’re driven by something that is greater than money, I think.

Andrew: I see what you’re saying. Right. If I were going to cycle around the world, at some point that I would realize that there are better ways to make money than that.

Chris: Right.

Andrew: It has to be about more than that to carry us through. The first step of the journey builds confidence and reliance and self-reliance, not reliance actually, that’s opposite, self-reliance. That happened to this woman here. Once again, we went online to look at these people, just like I did with your other books, to see where are they now. Is this really true? This just came right off the web. She makes hats, there’s her site, you know? I love how you use real people. You don’t use hypotheticals. Well, if somebody wants to knit, then it’s possible. No, you use real people, real examples, and this is a real person. Anyone out there who’s like me, who’s a philistine and wants to check on all the facts, can go and see Robin Devine [SP]. That’s her name. She began a quest. What was her quest?

Chris: That’s right. Robin from Omaha, was always a knitter and a crafter, and she began this project of making hats. Originally, her goal was to make something like 100 hats, and she was like, ‘Well, I can do that relatively quickly.’ She’s like, ‘I need a big goal.’ She believed in tying structure to the goal, which is a big part of the quest. At first, it was, ‘I’m going to make 1,000 hats’ but she realized that wouldn’t be a big enough of a challenge. So, her project is to make 10,000 hats, and she’s doing that over a number of years. You can go on this awesome website she has and you can actually put your name down to receive one of these hats. It may take a little while since she’s making 10,000 of them. There’s a whole charity component to it. So, it’s a way of introducing this craft that she loves with the structure of a long-term pursuit or adventure. I like stories like hers that are relatable. Again, just ordinary people embracing these values of quest and adventure. I also talk to lots of other people doing what we might think of is really, really big things. Like, In my story, I was doing this travel thing by myself. I didn’t necessarily expect anything to come of it, in terms of career-wise, but then this whole community came to embrace it, and it did become a business in some ways. But, just as importantly to me, it’s community. I feel like my work is now much more community-oriented than it ever was, and that was a direct result of pursuing a quest and being willing to embrace something than what I’d done before.

Andrew: I see. So you’re saying, don’t walk into this with the idea that I am obsessed with this cycling thing because I love reading about people who cycle or run long distances. I mean, multi-month running and cycling. Anyway, but if I were going to do that, it wouldn’t be about, I’m doing to do this so I can develop my independence, or I’m going to do this to develop my self-confidence. You’re saying just do it and allow the inner growth to happen. You don’t know where you need to grow, you don’t know what inner growth, you can’t program that inner growth is what you’re saying.

Chris: Yeah. I think what I’m saying is, if you have a crazy idea in your head, you should pay attention to that crazy idea. That’s what I’m saying. It’s not necessarily, like every person out there has to go out and do something completely outlandish, because maybe they don’t want to, right? Again, it’s not a good business model to travel every country in the world if you’re probably not going to be able sustain whatever that difficult thing is, if you’re not really excited about it. But, the converse is if you are excited about something, don’t forget about that. Don’t just put it off, don’t just say, ‘I’ll do that later when I’m out of school, when I have more time, when my kids are grown.’ I really believe you have to pay attention to that discontent or whatever you choose to call it.

Andrew: All right. One more personal thing before I go into the next point. You have one earbud in your ear, right? Not the other. And, it goes in your shirt, right?

Chris: That’s right.

Andrew: I don’t know that I could actually fully show this. I love the attention to detail. Where does that come from? Did you sit down and say, ‘How do I look good on camera, how do I make sure that I have an earpiece so that we don’t have an echo?’ What’s the thought process that gets you to do that?

Chris: I don’t know if I’m that good at that, Andrew, but you’re kind to say that. I just thought, “I’m going to be on this. I’ve been on Mixergy before. I know it’s a fantastic audience. I know it’s an audience that watches the whole interview, start to finish. Even if I screw up or say something dumb, they’re going to keep watching for some reason.’ So, what can I possibly do to better serve that audience? I know you think the same way. It’s audience-focused, it’s community-focused.

Andrew: I do. All right. Onto the next point, which is motivate yourself along the way. Track the progress with a list. You mentioned earlier that you like to make lists. Here is a woman who needed to do that. Let’s bring her up. 50 dates, 50 states. She had to kick-start a campaign for it. Tell me about her, if you could.

Chris: Yeah. This is Alicia Austerello [SP], also from San Francisco. She had just recently gone through a break-up and she had noticed that in some of the relationships she had before, she was dating the same kind of person, and she thought, ‘I want to learn more about the world, first of all. But, I want to learn more about relationship also.’ So, she started this project, which you’re showing, about 50 dates and 50 states. She would take this epic road trip together with the producer, and then eventually, of course, they would fly to Alaska and Hawaii, and just meet different people and write about that experience, write about relationships, write about dating, also about the challenge of the experience of doing something like this in public. So, it wasn’t a ten year huge mega epic kind of thing, but it was still something different for her. It was something challenging and unique. Maybe it had a little bit of a career goal for it as well, because she helped to write a memoir and maybe build a little bit of platform over it. But again, I don’t think that was the primary goal. I think the primary goal was self-discovery and exploration.

Andrew: I remember talking with Marc Suster [SP], the venture capitalist, who said, ‘If it’s important, measure it.’ And, of course, everyone says that. But for some reason, in that conversation with him, it hit me. Yes, anything in business that you really want to grow, you should measure it and you should pay attention to it. Same thing for quest, that it helps if you’re going to have a quest to say to yourself, I’m not just going to cycle. I’m going to cycle for a certain number of days, or I’m going to cycle for a certain distance, or I’m not just going to make hats until forever. It has to be 10,000.’ Why is the number so helpful?

Chris: Yeah. There’s two different things there. There’s the documentation part of it and then there’s why is the number in the first place? I really believe that the number is important. I really believe that it’s not a quest without that. It could still be a passion, it could be a hobby, it could be something you like to do, all those different things. But, I really believe that having a structure is what takes it to another level. Just in my case, if I was just a traveler, there’s Chris, he’s this guy who goes to a bunch of countries. You know? What is that? But for me, it was like, every country in the world. Okay. That’s pretty cool, right? It couldn’t just be like, going to 150 countries and then stop. Right? It’s not like I could just be, you know, “I almost made it.” here’s this guy who ran 250 marathons in a single year. Maybe that was you, Andrew. I don’t know. But, I thought that’s pretty awesome. But, most people are not going to hear about that and say, ‘Oh, I wish I could do that.’ You know? Most people don’t have that passion or that drive or that ability. But, most people, I believe, are like Robin in the sense that they do have something that they love to do. They have something that they’re interested in, and if they can focus that interest in the form of a quest, I think it will bring greater purpose to their lives.

Andrew: Let’s talk about the inner progress. We use the hero’s journey format for all the Mixergy interviews where an entrepreneur talks about how he or she built the business. And, if all we get to is, I didn’t have any money, didn’t have an idea, and suddenly I got an idea, made some money and now I’m healthy, it becomes a very boring progression. What we always look for as a team here at Mixergy, is what’s the underlying growth? What beneath the surface allowed them to get there? Was it finally overcoming their insecurity? Was it finally overcoming the fact that they felt for a long time out of the Silicon Valley structure, and because they discovered that they had enough in them that they didn’t need venture capitalists, they were able to do all this. Where does that fit in here, with Robin’s story or in general, how do we use these quests to bring out the better part of ourselves and not just be about cycling and hats?

Chris: Right, right. I think one of the other key features of quests, in addition to the challenge and the hero journey that you mentioned, one of the other features that’s usually, maybe not always, but almost all the time, something else happens along the way. Usually, there is an element of change or transformation that can’t always be predicted. I mean, you know that something’s going to happen but you don’t know exactly what’s going to happen. It’s not like I could just, you know, “Oh, I almost made it.’ You know what I mean? That’s my story is like, Chris is the guy who almost did it. So, that’s why I feel like those specifics helped. But after the documentation, you have to document, I think in some ways, in whatever way that you like to document the quest, then you should. And, different people do that in different ways. Not everyone likes to write. Some people are much better at photography than I am. There are other mediums as well, but I do think it’s helpful to kind of mark off or lineate that progress as you go along. I had a Wikipedia article that I just copied and pasted into my EverNote of every country in the world, and as I made progress over the years, I would literally go and put a little X next to it. So, I saw that EverNote fill up with X’s as I got closer to the end, and I was a little bit tired toward the end, I was focused on other stuff, but I got to keep going. I got to keep going because I’m almost there.

Andrew: I had that list. It’s going to keep me going.

Chris: Awesome.

Andrew: Push through the monotonous middle so you don’t give up too soon. This is someone who had that situation. Boy, did he? This is a better way to bring him up. There we go. There’s Gary Thorp, who had a quest. Do you remember his quest?

Chris: Yeah. Gary Thorp is a classical music DJ from Brisbane, Australia. Huge fan of classical music, of course, and one time when he was in London, many years ago, more than 30 years ago, he saw this symphony performed. And, this particular symphony was considered the largest symphony in the world, one of the most difficult. It required more than 800 performers, multiple choirs, all kinds of instruments that aren’t usually used, and therefore it wasn’t performed very frequently. You know, Beethoven, much more common. And, Gary was touched by this symphony. He thought that just the whole audacious nature of it was incredible, but he also liked the music. So, he wanted to bring the symphony to Australia. He tried and he tried and he tried. I don’t know if you were going to say something else there.

Andrew: Nope.

Chris: Took many, many, many years. There were lots of failed attempts. It’s a classic quest story because it actually took 28 years.

Andrew: 28 years.

Chris: 28 years to bring this symphony to Australia. And, during that time, by the way, it wasn’t performed anywhere else in the world. I mean, that was the last time it had been performed, was nearly three decades earlier because it was such a complicated thing. And normally, if it were to ever be performed again, it would be in London, it would be in Vienna, it would be in New York, you know, a place that had a lot more resources. Maybe more appreciation for classical music. But, his dream was, I want to bring this to my homeland. I want to bring this to my city, and eventually he was able to do it, but there was a lot of false start and failure along the way.

Andrew: Do you remember a moment in your monotonous middle where you had to really push through?

Chris: I remember sleeping on the floor of again, so many airports. I remember getting turned away in different countries. I got deported from one of them. I remember–

Andrew: Which is the one that made you feel closest to giving up, or if you weren’t Chris Guillebeau, you would be giving up; which one?

Chris: Yeah, yeah, yeah. Which one would be? That’s great. That’s great. Probably somewhere in Central Asia. One of the Stan countries. They’re beautiful countries but I think it’s just that time of my life, it was around country 140 or 150, I think. That’s when I was like, ‘Yeah. I’ve been doing this awhile.’ I think once I got to 170, 175, then I’m like, ‘Okay. Almost there.’ You know? I always want to be brutally honest with Mixergy viewers because I don’t ever want to B.S. anyone and say, ‘The whole thing was amazing.’ There were lots of monotonous moments, but I also don’t want to seem ungrateful, because I can look back and say, ‘Even though that particular moment sucked or whatever, I’m still glad to do it overall.’

Andrew: What pushed you through? Was it this feeling that you had to finish what you started, that’s who you are and you don’t stop? Or was there something else?

Chris: I think that’s a good way to describe it. It’s that I believed I could do it, I knew that I would always regret it if I stopped. I think that’s probably what drove it. I don’t think it’s always good to say, ‘You should never quit something,’ because there could be all kinds of things that you should quit, right? But, I didn’t feel that way in the first hundred countries. I didn’t feel that way until I was getting close to the end. So, since I was there, why not? You know, and I didn’t want to look back, as I said earlier, and be like, ‘That’s what I did with my life. I went to almost every country, but not quite.’ You know? That’s what drove me forward.

Andrew: Yeah. All right. Final point that we pulled out of the book is to believe in yourself even when no one does. I imagine that happens a lot when you set out on a quest. I know when I first started to interview, people didn’t believe, they thought it didn’t make sense. I remember starting my first company right out of school. People didn’t believe, and then those same people were the ones who were so proud and talked about, ‘Hey, look at what Andrew did.’

Chris: Yup.

Andrew: The Dutch government didn’t believe. We’re talking about real serious non-believer. The Dutch government didn’t believe in this woman. This is Laura Decker.

Chris: That’s right.

Andrew: She wanted to do what?

Chris: Laura Decker had always been a sailor. She was actually born a boat off the coast of New Zealand. She was a Dutch citizen, her goal was to circumnavigate the world, to sail the world on her own, solo, and to be the youngest person ever to do it. When she was 16, she had actually tried to leave a couple of times before and was stopped by the Dutch government, and then she essentially sued her own government for permission to do this, and was granted that permission. So, then over the next year, she sailed around the world.

Andrew: You know, how do you know if the Dutch government isn’t right, you know? It’s one thing if your friend says, ‘Don’t do it. It’s a jerky idea.’ It’s another idea if the government, a reasonable government says, ‘You know what? You might be too young. Why are you putting your life at risk?’ How do you know if that outside voice is something you should be ignoring or maybe it’s something you should actually pay attention to and say, ‘Let’s wait until I’m 20.’

Chris: No. Totally agree. I’m glad you brought it up. In her case, she did sue the government. She went through a legal process and eventually won that right to pursue her adventure. If she hadn’t had won that right, would she have snuck off in the middle of the night? Would she have waited? I don’t know. That’s a tricky thing. I do think though, that we often judge the riskiness of something or the worthiness of something in retrospect. We often look back after the thing has already been done, and then that’s when we determine, that was a really awesome idea, or that was a really stupid idea. I thought about this a lot when I was out there in some random countries. I thought, ‘You know, if something happens to me, there’s going to be a lot of people who would just say, ‘That’s just stupid. Why was he doing that? Why was he going to a place like that? He deserves what he gets.'” Right? But, because I went there and then I came back and everything was okay, it’s like, oh, that’s awesome. Right? So, it’s almost like we’re applying this lens, we’re applying this filter, looking back on the outcome of something, when in fact, life itself is very risky. Every decision that we make in some way involves risk of something. So, I don’t think anyone should do something fundamentally unsafe. I think, in her case, she was a sailor her whole life. She knew far more about this than many other people much older than her. But of course, you never know. It is a risk.

Andrew: Yeah. And a bigger risk, the one that we tend to fall into more often, is the one of just living an ordinary life and looking back and saying, ‘What happened?’
Chris: Yup. That’s a big risk.

Andrew: You know, the cool thing about this book is, and I want to ask you one other thing, but the cool thing about the book, let me bring the camera on myself, there it is, The Happiness of Pursuit, is that we all tend to want to emulate a little too much. I have to tell you, over the years I’ve heard your story and I kept thinking, ‘I could never do that. Frankly, I don’t even want to do that.’ So, maybe this whole thing isn’t for me, because I kept thinking of traveling to every county on the planet, instead of thinking outside the specific to the more general idea, which is to say, ‘Find a meaningful, big journey to go on.’ What I like about this book, I see you’re nodding, I’ll bring you back up here, what I like about the book is you’re showing, here are all these other ways of doing it. That happens, by the way, Chris, a lot to my interviews. I interviewed Jason, why can’t I think of Jason’s last name. Because in my head, I keep thinking JasonHeadsets.com because you sold his last name, headsets.com.

Chris: That’s right. That’s right. Surfer App?

Andrew: Is that the newest one?

Chris: Yeah. He sold his name to Surfer App now.

Andrew: So, Jason did an interview with me about how he decided he was going to wear a different company shirt every day of the year and charge the company for the right to do it. After that, I got, well I’m going to do a hat, and me and my girlfriend are going to do a shirt, and I got these shoes that I’m going to wear. You know? And it was just thinking a little too similarly to his idea instead of taking a bigger picture and saying, ‘What else is out there? What is in me?’ You’ve given us a bunch of examples. Again, as someone who talks to authors and entrepreneurs all the time, the more examples I can get, I know the more interesting and relatable it is to the audience, and I think the more it feels like the authors had the right to talk about it. You know? If it’s all just you just talking about one example, the Apple example keeps coming up over and over again.

Chris: Right, of course.

Andrew: And you maybe didn’t do your work. All right. So, here’s the final thing I want to ask you about. I was going to go to your website. Don’t worry, this is not a trap. I was going to go to your website, findthequest.com, and bring it up on the screen and say, ‘Here’s the place to go.’

Chris: Oh yeah. That’s right.

Andrew: It’s leading to Chrisguillebeau.com.

Chris: That’s right.

Andrew: Where should I be sending people?

Chris: Yes. Well, we should fix that. So, you are happy to send people wherever you want.

Andrew: Okay.

Chris: Findaquest.com, by the time that this is live, should actually go somewhere that would be great.

Andrew: Gotcha. All right. Does it bother you, by the way, that that happened and I just pointed it out?

Chris: I should fix it. I’m making a note. I’m going to go in and do it.

Andrew: I was looking at you and I said, ‘Oh. If he feels a little uncomfortable,’ (inaudible)

Chris: No, no, no. I was just like, ‘Where is he going? I have no idea.’ That’s totally cool.
[[00:04:53]]
Andrew: Findthequest.com. The site will be up. We intentionally, frankly, the team and I were just talking about how we rush this faster than any other program because I freaking love you, Chris. You’re a great guy. I see the way, the attention to detail and all the things that you put together. I said, ‘Let’s find a way and have Chris on here, even if it means that we have to rush it and we’ll make it work. We’ll put other things aside.’ All right.

Chris: I really appreciate that–

Andrew: And it is, I think to me–

Chris: And thanks to you and all your team. It’s really a fantastic team. Thank you.

Andrew: Thank you. Yeah, I should always say over and over again, it’s not just me. It’s Ben who actually went through and picked out the ideas that would work best for the audience and found and did the research. It’s Anne Marie who kept following up with you and organized this and produced it. And, it’s me who just gets to sit here and have a conversation with you. The headset, I want to say why I pointed that out. It’s the attention to detail and the little things, like the sales page that you have, like the feel of the book here. It’s not just, I don’t know what you did to it, but it feels a little bit worn, you know? It has the sense of details.

Chris: I didn’t do it myself, Andrew. I didn’t actually go to the warehouse.

Andrew: You always say that to me too, and I know you have a team too, but it’s the person who I think sends this out, the message to the team. And then the team gets to work together on it. Anyway, that’s why I wanted to have you on here. I like to see the details behind what you do, and I like the magnitude of the way you think. You think bigger, not just a hat, but how do we make a thousand hats or thousands of hats. All right. Thank you so much for being on here. The book is right up there, there. The Happiness of Pursuit. Chris Guillebeau, thank you.

Master Class Toolbox

Transcript

Andrew: This session is about how to wow your customers within 100 days. It is led by… boy, I caught you right there as you were adjusting. That’s an unfair thing for me to do.Joey: That’s all right.Andrew: But it’s a good way to introduce you, Joey Coleman, the founder of Design Symphony, a customer experience branding firm. You can also check him out at JoeyColeman.com. I’ll help facilitate. My name is Andrew Warner. I am the founder of Mixergy.com. I like to adjust and get ready here too.Joey: You look just beautifully quaffed and ready to go.

Andrew: I’m working on it.

Joey: You are succeeding.

Andrew: I’ve admitted I’ve hired a designer to take me out shopping and help me pick out clothes. I’m working on it.

Joey: I like it; I like it.

Andrew: First we worked with ideas and now it’s time for me to step it up a notch with my design.

You know I told you before I was especially excited to have you on here because when it comes to increasing conversions or increasing Google Analytics or search engine optimization, there’s tons of people who talk about this but there aren’t enough business people who think about what happens after you get the customer, who think about how to wow the customer after they pay.

It’s all about how do I get them in the door and how do I get them to pay and I’m excited because I want my customers to be happy and I know my audience want’s their customers to be excited about working with them. You’re here to teach us how to do it because you’ve come highly recommended by mutual friends. You do this well and one time that you did it, Joey, was this customer that you worked with had a problem, right.

Joey: Yes.

Andrew: What was the issue that they had?

Joey: So the issue that they had,… this is a great client of mine. They’re called Temperature Alert. What they do is they make a device that measures the ambient temperature in a room. So for example if you have a server closet and you want to make sure it stays within a certain range you put one of these devices in. If it gets too hot or too cold it sends you a text message, an e-mail and calls your cell phone and says hey there’s a problem. You need to get in there before you lose all your hardware. They sell this device for $399 and then there’s a monthly monitoring fee.

Like many hardware and technology companies they don’t make much profit if any on the device. The actual profit model for them is in the recurring subscription. So people would buy the device and then they would never plug it in or turn it on, which not only left a lot of money and opportunity on the table but it was contrary to what the entire business was started for, which was to help people monitor their temperatures.

So what we figured out is that whenever they plug this device in what it does it is reaches out to the main computer at Temperature Alert and sets up the system and starts recording the temperatures and allowing them to set these alerts and alarms. If by day seven, after receiving the device, they haven’t actually plugged it in we send them an email.

The e-mail includes a link to a video showing the C.E.O. taking less than one minute to install the device because one of the big things that they tout is this ability to install the device super easy. It’s a big differentiator from them from the competition. As you see in the bottom right corner there on the screen there is this little bomb ticker that’s going up towards one. They slide in just under one minute to get it installed.

What they found is when they started sending this email 60 to 70% of the people would install and subscribe. So by creating one video they actually increased their revenue from people who had they had sold this device to by 60 to 70%. It took a minute to shoot the video. It was like hand held with an iPhone. It wasn’t a high production video or anything like that. What’s interesting is the one push back they did get people said, “Well sure guys, this is the C.E.O. Of course, he can set it up in under a minute.” So what we did in the next video is the UPS guy setting it up. So that we could show…

Andrew: Oh really?

Joey: Yes. So that it was just anyone, any random person, it was such an easy device to use that they could set it up and use it. It’s revolutionized the number of people that have signed up. What I am most excited about, which you eluded to in the initial entry [??], is that it allowed the C.E.O. to reconnect with why he had gotten into business in the first place, which is to serve his customers. Like, yeah it helped on their bottom line and it drove some more revenues but what it really meant is that people who were buying the product actually used it.

Andrew: All right, so what we are seeing is by caring about customers after you make the sale you increase your revenue but you also increasing your satisfaction. They’re happy. You’re happy. Business grows. Here’s how we are going to break this topic down so it is actionable to you, our viewer here today. These are the big tactics we are going to be talking about for wowing your customer. There is something that we couldn’t squeeze into this and that is, there are eight phases customers go through as they’re working with you and they want to enhance your experience with each one of those eight phases.

Since we couldn’t get those in here let me show you where you can go. You just go to Joey’s Website, joeycoleman.com/mixergy he will be discussing it. I know we couldn’t get to every single thing here in this session. I will give you that URL later on, in case you didn’t get to write it down. These are the important issues I want us to focus on today. The first is, to check out the present. You want to know what you’re doing right now and the first hundred days after a sale to create a great experience for your customers. So start taking inventory and you did that, Joey. There’s a video of a salesperson personally introducing an account rep – actually, how did you do it?

Joey: What happened is I went to an event where I gave a presentation on the importance of doing this. When we went through the exercise that hopefully the people watching the master class right now are going to go through, they did an assessment of the six potential ways you can connect with your customers in the first hundred days. They realized they weren’t using video at all. So they came up with this idea, and I’ll give them a lot of credit, it was the CEO who came up with this idea. He said, “We’re going to start filming videos with salespeople.”

Their business is debt management, so if you have a lot of credit card debt you go to them, they consolidate your debt, they help you get out of debt and get on a payment plan. It’s a great organization out of Canada. What he figured out was there was this lag time between when the salesperson met with a prospective customer over the phone. Then the person signed up. Between then and when they started working with the account rep. Like with most companies, the sales function and the account rep function were two different things. Because there was that disconnect, they came up with this idea of let’s shoot a video of the salesperson, who has already had this conversation with the new client when they were a prospect, connecting and introducing them to the account rep, so can actually see who they’re going to be dealing with.

Now, what’s really interesting about this video is, all of this work happens over the phone. Like, prior to this video, you never saw the person. So, the whole idea was, this gave an opportunity, as you can see it’s a selfie video. He’s holding the iPhone up. So again, it doesn’t have to be high production value. We live in a world where most people, the main way they use video on their computers is for Skype with family members. Obviously, you have a whole offering here at Mixergy of Skype interviews with entrepreneurs, but most people, the main way they’re using Skype is to connect with loved ones.

So let’s stop and think about that for a second. If the mode of communication is most frequently love, why aren’t we using that in a business setting? Kind of saying, hey, think of us like your family. Think of us like other people you love when we connect, we do it via video. So, ordinarily, after a customer would have signed up would this company, they’d be handed off to someone else and it feels like, someone just sold me and now I’m being dragged off to someone else? They don’t care about me anymore.

Here, customer signs up, and boom, not only is he handed off to someone else, but he gets to meet the person for the first time, see the video of the person who made the sale, then get a nice, warm introduction to the person who’s going to take care of the sale. I love that idea. You mentioned they came up with it because they thought about the different ways they connect with their customers. Here’s a worksheet that you’re encouraging everyone who’s watching us here today to use. What are these six boxes?

Andrew: Sure, so these are the six main communication tools that I’ve identified that can really move the needle in the first hundred days. So, starting at the top left, we have in person interactions. Moving to the right we have email communications. Down next row, mail, so physical mail. Then phone. Then down at the bottom left, video, like the example we just talked about.

Finally, wrapping it all up, presents, gifts, surprises, unexpected things. So, for this first exercise, what I would ask people to do is, take two or three minutes, it doesn’t really take the typical company more than that, and put ink in all the boxes next to things you’re currently doing in the first hundred days. So, for example, if someone buys your product online and you send them a confirmation email, you would write confirmation email in the email box. If a week later, you call them and thank them for their purchase, you would write down thank you phone call.

Not to surprise anyone, but what I found was most companies before we have a conversation are doing two, maybe three of those things in the first 100 days which means you’re leaving a lot of other communication tools on the table, not to mention multiple touch points within a single communication tool.

So Joey, what you are saying is once we fill this out, if we start to see that there is a box or two that are empty that’s where we can pay more attention and the company that you mentioned earlier might have noticed that the video box is empty and that’s what would have put the thought in their head to say ‘Hey why don’t we shoot a video for each customer welcoming them and introducing them to the person who see going to be servicing their account going forward.

Joey: Absolutely. That’s exactly right Andrew. The other only thing I will say about this is stop thinking about the additional touch points after the sale as opportunities for an up sell or an additional way to move your product and start thinking about what are the different ways we can serve our customers and welcome and on boarded and invited into our family of doing business with us.

Andrew: That’s great. Onto the next big point, which is, where is that big board? There it is. Create an emotionally positive hit with the first interaction after the sale. You have a client Zappos. You’ve worked with Zappos and they do it really well. What is going on here that helps us understand how to create that positive emotional hit.

Joey: So as we will talk about in the eight phases of PDF that you mentioned earlier that folks can download if they go to the web site, the second phase people get into after they make a purchase is the state of affirmation. They’re left wondering…, and this is brain science, this isn’t Joey’s idea, this is just the way the human brain works. We have the dopamine rush when we do a purchase. We feel euphoria and excitement like “Oh yes, this is going to be the product that the answer to my dreams. Or this is going to be the service that saves all my problems.”

Immediately when that dopamine starts to leave the brain, what’s left is fear, doubt and uncertainty. In common parlance we often refer to it as buyer’s remorse. So that first communication after the sale is really crucial to reaffirm in the buyer’s mind that they’ve made a good choice. Zappos does that brilliantly by sending the e-mail you showed. What the e- mail says is, “Hey by the way, you ordered these sandals. We got the right ones. We’re showing you a picture of it. Here’s what you paid. They’re on their way.”

What I really love about it is, and I’ve called out with that red circle, is they start out by saying, “Whoa Nelly, have we got a surprise for you.” I mean stop and think about how something as simple as an order confirmation e-mail can actually express your brand personality. Here Zappos is saying, “Hey, even though we are a billion dollar plus company, doing business with us is going to be a different experience. It’s going to be friendly. It’s going to be colloquial. It’s going to be playful.” Immediately when you get that e-mail and you read that opening line you can’t help but smile, right?

Andrew: Yeah.

Joey: Then they dive deeper into it and say, “Guess what, we’re upgrading your shipping” so that “Hey Joey, you ordered these cheap skate free ground shipping. We’re going to upgrade your shipping to next day and so we are going to kind of blow your mind about this.” They have some playful language in there about it’s kind of like we waved our magic wand. They sign off by saying, “We really hope we’ve made your day.” It’s just a tiny little thing that absolutely revolutionizes what people are emotionally experiencing right after they’ve given you their hard earned money.

What’s really interesting briefly is that normally when we make a sale on the company level we are jumping up and down and cheering like “Yeah, we’ve got a new client. This is awesome.” We’re excited without ever to realize that on the customer side they’re saying “Oh my gosh, is this really going to work? Did I make a good choice? What if I spent all this money and it’s not worth it. Will I be able to get a refund? How will this work?” Most companies make no effort to reaffirm the decision. They think that once the sales happen the customers already made up their mind.

As John Jantsch, who’s an amazing writer, he just wrote this book called Duct Tape Selling is not complete until the customer gets the result they were looking for. So we think the sale is complete at the purchase? No, no, no. Until they get the product or they use the service and they actually incorporate it into their lives in the way they had intended to we aren’t at the phase where they are actually using it. They are still in affirmation. They are still wondering what it is going to be like.

Andrew: We have a visual or two left that I want to show here but you mentioned the name of an author and a book. I want to check out. What’s the name?

Joey: John Jantsch. He has written a number of books in kind of this duct tape brand so duct tape marking. His newest book Duct Tape Selling is absolutely fantastic.

Andrew: There you go. He will be on… [??]

Joey: It was as if we planned it. Fantastic. John is a great guy. His message totally lines up with mine. He takes you from beginning up to the sale and then talks a little bit about the post-sale as well and so you can dive in and apply first 100 day concepts there as well.

Andrew: All right, then after the e-mail this comes to you in the mail. What’s special about this?

Joey: What I love about this is stop and imagine getting this package in the mail that says “Packed with Happiness”. You can’t help but look at this package and smile and think. Now, even if you are a skeptic; even if you are a pessimist and go “Geez, packed with happiness. What the heck is that?” it’s going to produce an emotional reaction, which at the end of the day all the studies show that even a negative reaction is actually better than no reaction. Like numb apathy is what we want to avoid at all costs and yet most of us ship our products in corrugated cardboard boxes that are brown. Like [??] element.

It is why Amazon has a smiley face on their logo. It’s probably part of the reason why Amazon purchased Zappos. Right? Because Zappos got it. They were living the Amazon and vice-versa and it was an easy melt between the two brand cultures. And it doesn’t end there; I didn’t know they did this.

Yeah. So this is great. So what Zappos will do is [at] their call center, which isn’t all of their orders, a lot of people order on line, but in their call center, all of their employees have these blank cards and markers and stickers. If they do a call with a customer that they particularly enjoy or they think it’s a great call of they make a connect, they can hand make the customer a card and then send it out. They do this all the time.

From a business point of view, for entrepreneurs and business owners watching the class, the secret here is to provide your employees with the tools they need. So like sitting next to every call center desk is a box of blank cards, markers, stickers, felt, envelopes, everything they need. All they need to do is after the call take a few extra minutes to hand write a note or create a little card, put it in the envelope and then multiple times per shift a team leader comes by and picks up all the cards, assembles them, they all get stamped and sent.

It’s a tiny little thing that costs a few minutes and maybe not even a couple dollars at scale and it absolutely blows people’s minds. If you search Zappos personal cards on Google you will find 1000s of examples of these various cards these people have sent. It’s just crazy.

Andrew: Let’s take a look. Personal connection cards?

Joey: Yeah, and we click over to images and you should see a bunch of images of cards that people have sent.

Andrew: So what if I do Zappos cards?

Joey: Yeah, there you go.

Andrew: There we go.

Joey: There’s the boots card right there at the top.

Andrew: [??]

Joey: There’s another personal one. I mean there’s just . . .

Andrew: [??] Is this the person doing it?

Joey: Yeah that may be an actual video, that’s exactly what it is. It’s a video of somebody pre-[??] the card.

Andrew: Yeah. There she is and she’s writing…

Joey: …writing the card. Yeah this is just an employee who works in their call center. Actually explaining how they make the cards and as you see on the desk behind her there’s that stack of envelopes and she just fills out the cards. You know what’s great about this is there’s no heavy handed corporate “Let’s make sure that it’s on message.” This is what happens when you hire employees that live your brand and core values. You don’t have to micro-manage all the communications. It allows a billion dollar company to feel like a small family owned business that really cares about its customers. This is a super easy thing that any watching in the class could implement and it will absolutely revolutionize the interaction.

Andrew: And by creating that emotional hit right after someone buys. We’re usually excited that someone bought. They’re probably thinking should I have bought it or not; having some buyer’s remorse feeling a little guilty about spending the money. This is the way of counter acting it and reminding them we are good people that are going to take care of you,. We still care even after you’ve paid us.

Joey: Exactly.

Andrew: What a great, great [??].

Joey: It lets them know you are not a number. You’re a human being. and at the end of the day human beings do business with other human beings. So unless you don’t have human beings as a customer this idea should work.

Andrew: On to the next big point, which is to build experiences to lessen negative emotions and hold their hand, hold your customers’ hands. You have a client who keeps, we talked about cards on hand, you have a client who goes a step further and keeps gifts on hand and it is so clever why he would do this. Who’s the client and what are they doing?

Yes, so this company is On Going Operations. It’s run by a buddy of mine, Kirk Drake. He’s the C.E.O. and what they specialize in is disaster recovering for computer systems. So if you’ve ever had a computer fail you know what a nightmare that can be. Imagine that happening on the scale of 100 or 500 or 1000 or 10,000 employees, right? Their computer’s go down. It’s “Oh my gosh, five alarm fire!”

Everyone is freaking out. It’s miserable. So what their business specializes is getting people, hopefully avoiding that failure, but if it does fail getting them up quickly and getting them running again. So they do two things. Number one, usually when these things happen invariably it requires somebody staying after work late to work through the night to make it happen.

Andrew: On their client’s side someone’s working late.

Joey: Correct, correct, on the client’s side so there are people on the company side at On Going Operations working through the night but it’s also requiring some clients to work through the night. So what happens is the next morning the I.T. team gets individual Starbucks gift cards delivered to them that basically says, “I know you had a late night last night. So sorry. Thanks for being there in the trenches with us. Have a cup of coffee on us this morning.”

So a little thing, not a big deal, but frankly the I.T. guys, with all due respect, usually don’t get any gifts. Usually the gifts go to the C.E.O. or maybe to the head sales person or maybe an account rep, never the thankless job at the I.T. guy. Right? So here is a great way to engage the front line employees with your brand experience. It’s not just the senior executives. When they do one of these big installations to get everything ready, then they show up with a cake and balloons. I mean it’s absolutely crazy. Imagine you finish this huge installation and you’ve gone through all the headache and nightmare of getting it done, the blood, sweat and tears and the agony.

You’ve finally achieved the end goal of the installation On Going Operations shows up at your office with a cake and balloons to celebrate. It’s a little thing. They have a preset set up with a local bakery that knows and as you see they put their logo on the cake and lets them know ‘hey we’re a partner’ but then they actually send team members to the site to actually join in the celebration and say hey guys job well done. This is a huge selling point because again, usually the people that are required to do the implementation are not the people that get the credit. Usually it’s the C.T.O or the C.I.O. that gets the credit for everything installed. Here we’re saying well front line employees need a party too.

Andrew: Here is the site. I was checking them out earlier. Impressive. You know ordinarily companies like this are just there to do the job but can you imagine getting a card the next day acknowledging that I was up or that you were up over night dealing with the issue and having a Starbucks gift card in there and acknowledging that you might be tired from having dealt with that. What a great idea. They key take away though is you want to build those experiences to lessen the negative emotions.

Joey: Right and it I guess the big take away for any company, because some people listening might say ‘Well Joey I’m not in disaster recovery so how would that apply to me?’ Every business has elements where your customers are going to be having negative emotions. Whether it’s through the discovery process, they start to think it’s taking too long or if you’re a logo designer and you’re into round four of the revisions and you’re hating life, you know they’re going to be these pain points. Step back from your business and look. What is the customer experiencing at this moment? What are they going through? And think about little things you can do.

Again, these don’t have to be big dollar spends as much as they are to show that you care.

Andrew: All right back to the big board. Next thing we are going to talk about is to listen. Your customers are telling you what they want you to create… Let me say it again. Listen your customers are telling you that they want you to create deep emotional connections with them. If you listen you will hear them. You had a customer who noticed that you had a child and a passion. What was going on there?

Joey: Yes. So anybody that has had a conversation with me for longer than 20 minutes probably hears me mention Notre Dame. I went to the University of Notre Dame for undergrad. I believe there are two types of people in the world. Those that think Notre Dame is the greatest thing in the world and those that haven’t been educated. I believe that, yet.

So basically this guy, in a conversation with me figured out Joey is Irish. He went to Notre Dame. He has great love for the University of Notre Dame and he knew I was having a son. So my son was born, two weeks later in the mail I get a package with two custom made Notre Dame onesies. Now what is really fantastic here is this guy…, his name is Jim Shields. He runs a company called Board Meetings International.

What Jim figured out is, number one, any new dad is going to be really excited about their kid. Any new dad or mom is going to really excited about this new child. Number two, if I can pair the wonderful emotional euphoria they are having about welcoming this new little person into their life with something they were already passionate about, like Notre Dame, you can make the worlds collide in a way that will never be forgotten.

So this is my son [Locklan]. This is him wearing the Notre Dame onesie that Jim Shields gave me and what’s great is every single time I put this onesie on my son, not only do I smile because it’s Notre Dame and he’s supporting the proud family colors, but I’m also really excited and remember Jim. I remember the fact that he went the extra mile to actually listen to what I am saying and know that I was a fan of Notre Dame, know that I was having a child and use it as an opportunity to create a fun present which we go back to that chart from a previous example we have the six things you can communicate.

Andrew: [??]

Joey: This is the great example of a present. It was unexpected. It was a surprise. It connected with something emotionally. It wasn’t hey here’s a coupon for 10% off your next order. That’s not a present for your customer. That’s a present for you. Stop thinking… you can give those out, but stop thinking it’s a gift for your customer. A gift for your customer is something that they wouldn’t necessarily buy themselves but if you buy it for them they are like, “Oh my gosh, I totally wanted one of these. This is perfect.”

Andrew: So Joey, I don’t have a good memory. I know now that you said Notre Dame. I’m going to forget in a day. I’m going to forget so much, but I still want to show you that I care. What’s the process that I can create that helps me deal with my forgetfulness. Do I start writing this down in a C.R.M.?

Joey: Absolutely. There’s that age old saying that ink fades slower than memory. Right? You’ve got to write this stuff down. Some people get caught up and they’re like ‘Oh how many fields do I have to fill in. How do I do this? How do I keep track of it?’ We’re going to talk about some ways later with some of the other tactics but right out of the box the first thing you can do is actually open your ears in a conversation and listen to what people are saying.

If they say, “Hey I just got back from vacation with my family in Australia”; or “I’m getting ready to go see my grandparents back in Iowa.” whatever it might be, write that down. Even if it’s just in the note section of your phone address book so the next time you’re on the phone with them you can say, “Hey, how was that vacation?” Oh my God, Andrew actually listened. He cares about me as a person. If you listen to the little nuggets, especially from their personal life, these are often things that people are highly emotional about, have great positive experiences around and it will blow their mind if you listen because frankly most of your competitors aren’t listening.

Andrew: Yeah. I need to do am even better job of doing that.

Joey: We all could do a better job of doing that.

Andrew: On to the next point, which is to observe. Your customers will often show you what they want in order to create a deep emotional connection with them. You want us to observe it the way that, well when you were at this hotel what happened?

Joey: I was staying at the Mandarin Oriental in Las Vegas. I’m a professional speaker so I spend a lot of time on the road giving speeches at events and conferences. It was my first time staying at the Mandarin Oriental and they are notorious for glorious service. I flew in late. I had a speech the next morning and frankly I had been on the road for three weeks and I was sick as a dog. I had a sore throat. I had a cold. I was miserable and for somebody who speaks for a living to be losing your vocal cords and be all stuffed up, this is not a good situation.

So I get up to my room and I had to quickly unpack before going down to the welcome reception and I open my bag. The cough syrup I had purchased at the previous location, I hadn’t gotten the cap on tight and as result the cough syrup had spilled all over inside my shaving kit. It was a chronic mess and for anyone who’s ever traveled experienced what happens when one thing leaks and it totally destroys everything. It was absolutely miserable, but I didn’t have any time so I just set it up on the counter and I was like, “That’s it. I need to run down to this meeting, and I’ll clean this when I come back.”

I came back to the room a few hours later, and I saw all of the stuff from my shaving kit had been taken out of the bag, cleaned and was drying on a towel. The actual bottle of cough syrup was sitting on the counter, all cleaned up, washed out and it was sitting on top of a note. I lifted it up and read the note. The note said, “I hope you’re feeling better Mr. Coleman – Kelly”.

Now this is a perfect example of an employee, in this case the house keeper who was responsible for turn down service that night, going above and beyond. I’m sure it was never in the Mandarin Oriental’s training policy that if you see somebody with a spilled bottle of cough syrup, clean up the bottle of cough syrup, wash it all out and then write a personal note but that is what Kelly did. From an observer’s point of view it just goes to show that there are little things that are happening with your customers all day every day that if you’ll just open your eyes to see things that may be causing them pain or discomfort or displeasure you can jump in with a small tweak or a little nuance that will absolutely blow their minds.

Andrew: I’m so glad you took a photo of this. This is what they did. It’s unbelievable.

Joey: It was incredible and I have to admit, the before photo, as I was leaving the room and there’s a reason why it’s a little bit blurry in the photo. I was like, you know I’ve heard they have great service. I wonder if anybody will do anything with this. I was just like, probably not but I’ll snap the photo and I was so happy that I did when I came back because I was like wow. Here was an amazing opportunity that Kelly at the Mandarin Oriental in Las Vegas took advantage of.

We’ve all probably had that experience where we are like, “Why didn’t they notice this? Why didn’t the dry cleaner notice that I was missing a button? Why didn’t the person at the car wash notice that there was an extra line of dust on the windshield wiper blade so that they could have cleaned it off. You know, these little things that we’re like, “If it’s your business you aren’t you figuring… why do I as the customer have to figure out what you should be doing?”

Andrew: I like how you are aware of how others are doing is that you are actually walking into the hotel thinking this is a hotel that is going to teach me something potentially. Let’s see what they teach me.

Joey: Yeah. It’s a blessing and a curse, Andrew. My wife teases me because everywhere we go I’m like, “They could do this. They could do this. They could do this.”

Andrew: It’s got to be more of a curse in most places because you see all the little things that they could do.

Joey: Absolutely. I mean, at the end of the day this is why I am so passionate about this topic because the bar for customer experience in this country, and frankly around the world, is lying on the ground. The average person, if you were to ask them, “Tell me the best customer experience you’ve had in the last year?” If you gave them 30 minutes, they would probably still be trying to think of one. Whereas if you said, “What’s the worst experience you’ve had in the last month?” I guarantee they are like, “Oh my God, I was on the phone with Comcast, and it was horrible.” Or “Oh it was unbelievable. I had to deal with my cell phone provider” or “Oh, blah, blah, blah.” The bad experiences are everywhere.

Andrew: Yeah they are. All right, now we investigate too. If your customers aren’t leaving clues about how to create a deep emotional connection with them you have to really investigate ways to connect with them. You did that for someone who… actually the tools are out there today using social media. I don’t know how much you can tell without letting you reveal your… I’ll let you tell your story.

Joey: Sure. So what’s really interesting is that average person that you are doing business with has a Linked In profile, a Facebook profile, they may be on Twitter, they may be on Pinterest, they’re already holding giants billboards up in the world saying ‘This is what I like. This is what I care about. This is what I am passionate about.’ Yet we’ve all been on those calls with someone for the first time where they are like, ‘ So I didn’t get any time to look you up. Can you tell me a little bit about yourself?’ and you are like “Really?” There are 1000 ways that learn about me and you didn’t take a millisecond to try that.

I was in a situation where a non-profit wanted to hire me. The head of marketing at the non-profit was all about bringing Joey in and having me do some work shops and helping their team. The head of operations was a little skeptical and so the head of marketing said, “Joey, I want to arrange an hour long phone call where basically you can explain to my colleague why we should do business with you.” So in traditional [??], kind of a pitch call. Right? Where they were going to figure out if they were going to do business with me.

So prior to the call I got the name of the person who was going to on the call, which is amazing how few people actually even ask that, like who else is going to be on the phone? I did some research on this guy. Low and behold, I found out that he grew up in a small town in Iowa that was about 30 miles away from where I grew up. Now what’s really interesting is if you grew up in Iowa or you know anybody who grew up in the Midwest 30 miles away means you’re neighbors. In the big city 30 miles away means you are in another state or you are in the burbs or you are beyond…

Andrew: [??] to be here.

Joey: In Iowa 30 miles away is the grocery store. Okay. That’s your local neighborhood grocery store. So I found out this guy had lived in Iowa and we get on the phone call. Before the call even started they are doing the introductions, “Oh and meet so and so, he’s our head of operations.” I said, “Hey that is absolutely great.” and I said, “You know, at the risk of being too personal, how are the”… I will make this up to illustrate the point. “How are the Bobcats going to do this season?” And he’s like, “Excuse me?” I said, “Well I’m sure they are not going to be as good as the Gales”, which was my high school’s mascot. And this guy starts laughing and he says, “How did you find that out?”

I said, “You know there’s this amazing tool called Linked In where it says where people were born and I looked it up and figured out where you were born and kind of looked and presumed that was where you went to high school”. It turns out he went to a rival high school. Long story short, 45 minutes of that hour long call was a conversation between me and the C.L.O. about growing up in Iowa.

That’s all it was; nothing business related, nothing at all about what I was going to do for them, nothing at all about the value or the results that we were going to get. Just chatting about what it’s like to grow up a farm kid in a little town in the middle of nowhere in Iowa. Forty-five minutes into the hour long call he says, “You know what? I’m going to go ahead and jump off the call. Why don’t you guys set this up? Joey is looking forward to working with you.”

We had a talk one minute about what we were actually going to be doing. The moral of the story is you create tremendous personal and emotional connections with people if you’re just willing to investigate, do a little bit of research on what matters to them, and then throw that into the conversation and not in a fake weird way. I mean, if this guy had grown up in Los Angeles, I wouldn’t have gone there. I would have been interested in a more typical call if this is what I’m going to do. But I found out that we had this common thread, jump on it and it totally changes the interaction.

Andrew: What’s your Twitter name? Let’s see what we can find out about you right now.

Joey: Yeah, you know that’s fantastic and some of my friends that are on Twitter are totally going to laugh about this. I am a late Twitter adopter. I just signed up for Twitter last month.

Andrew: You know, that explains a lot.

Joey: Yeah.

Andrew: There’s so many other Joey Colemans who come up whenever I do a research.

Joey: There’s the Canadian Joey Coleman who’s a reporter. He’s my biggest doppelganger, right? He’s starred in a couple of movies. He’s a reporter now, but yeah, no, I just literally came to Joey Coleman. And so as a result I got the Joey Coleman as my Twitter handle.

Andrew: Oh, okay. Let’s see if we can still see anything even though you’re . . . Twitter.com/ . . .

Joey: There’s nothing there.

Andrew: No, there’s nothing there.

Joey: No, no.

Andrew: Do you still have the address?

Joey: No, nothing. As I think of my colleague, Jason Gainer, who did an interview with you a while ago said, “The crazy thing about Joey is that he has little to no online presence.”

Andrew: I know. I hadn’t heard of you until he told me.

Joey: I’m a little stealth that way, Andrew. I fall into the category of someone that you’re going to have to investigate a little more.

Andrew: Okay.

Joey: But you go over, for example, to my LinkedIn profile or my Facebook profile. And you scroll down to the bottom of either of those, you can find all sorts of ways.

Andrew: What’s your Facebook name? Joey’s URL?

Joey: I think it’s JoeyColeman1.

Andrew: JoeyColeman, what? Sorry.

Joey: JoeyColeman1, the number one.

Andrew: Number one. All right, let’s take a look. I’m not logged in right now, so it’s not giving me anything. Let me see. Gotcha.

Male: Should I log in?

Andrew: No, it’s going to be too tough right now to log in. My intention was to use incognito when I do sessions like this because I want to see how the world would see the page we’re going to be showing not my unique search results or my unique experiences.

Joey: Totally. So the moral of the story is a quick insight about me. If you were to go to my page and you scrolled down to the bottom, you’ll see connections to Notre Dame and more specifically you’ll see a connection to an event I attended which is a reunion of the Notre Dame Glee Club. What has amazed me is that I was a big member of the glee club. I absolutely loved it. It was an amazing aspect of my college experience.

And one person in the history of doing business has figured this out before they contacted me. And let me tell you they got as much of my time as they wanted because they started with the conversation with, “Before we jump into business, can I just hear what it was like to be on tour singing all over the world with the Notre Dame Glee Club?

Andrew: Ah, that’s what it is because I was going to say, “What gift do I give you? You were in the glee club. Do I start to . . . I don’t even know. All right. And I see it now. Here’s me in my logged in state. All right. So I don’t even have to give you a gift, I just have to mention it and say, “What was it liked to have traveled so far with the glee club?”

Joey: I’m the guy who’s over nine who goes by Joey, right? No, that’s not me there. Just try JoeyColeman.

Andrew: Okay.

Joey: You can see how often I log in to Facebook for myself.

Andrew: No. I’ll have to look it up.

Joey: Try searching.

Andrew: What is going on? All right. I’ll have to look it up later.

Joey: Self mode, there you go.

Andrew: [laughs]

Joey: So anyway, yeah, for some of your clients it’s going to require a little bit of extra effort, but when you do connect it’s going to be a huge payoff.

Andrew: Actually it’s much easier than I’m making it out to be right now. I’m asking you because I don’t want to get too distracted.

Joey: Good.

Andrew: But I use reported in Gmail. As long as I just type in your name into the “to” line of any email, if I never send you an email and I mouse over it I’ll see your Facebook link and your Twitter link and all that.

Joey: Okay.

Andrew: But I didn’t want to start doing all of that research while we were talking.

Joey: And it’s a great tool, and frankly I’m surprised more people aren’t using it.

Andrew: I know.

Joey: Because it’s so good, and it’s the technology solution. It took what I’m describing and made it exponentially simpler.

Andrew: Yeah.

Joey: Because then, for example, this is funny that it would come up in this context. Right before our interview I had a call with a guy who’s a prospective client. And as is my way prior to doing the call I just logged on to his Facebook account to see what this guy had done and looked at LinkedIn. I found out that he had met with the guy who had founded TED yesterday.

Andrew: Ah.

Joey: So the original founder, Ted. And so when I was on the phone with him, I was, like, “Look, I know we’ve got this time set aside. I’m really excited about it. Can you tell me about lunch with the guy that founded Ted yesterday?” Twenty-five minutes later we’re still talking about this. All the …

[??]

Joey: … [??] is looking.

Andrew: There was. What’s that, let me see if I can find, there’s a tool that does that. An app that does it too, in case you can’t because you’re on the road. But I just, let me see, did I store it here? One of my former interviewee’s invested in it and, I just packed my phone with apps recently, so I can’t find it. I’ll have to look it up.

Joey: No worries.

Andrew: All right.

[??]

Andrew: Sorry, go ahead.

Joey: I was just going to say …

Andrew: I get the big point though. It’s, look people up. Today people have their information online. With a few minutes of research you can come up with little things about them that mean the world to them. Like, that they were part of the Glee Club, or that they went to a local high school, and just bring it up in conversation. I was over-thinking it by saying, what do I give as a gift? They’re saying, you don’t need that. Just say, hey, how was it, or what was it like to, etcetera.

Joey: Yeah, absolutely. Because, frankly, as an opening (??), the gift may make people feel uncomfortable. Because that’s like, wait a second, stalker, what are you doing?

Andrew: Right.

Joey: That’s a little too friendly, too fast. But for somebody that’s been your client for two or three years, and you’ve never given them a gift, which is the majority of the people listening to this class right now, seriously guys, give a gift.

Andrew: All right. Now so far we’ve been talking about the customer. The final point we’ll be discussing has to do with the team. And you met, as an example, you have a software company that you have as a client that took their people to, I don’t know if this is the exact place, but someplace like …

Joey: That is the exact place.

Andrew: This is the exact place that he took it too?

Joey: That is the exact place, yeah.

Andrew: Okay.

Joey: So, here’s the background story on this. This company runs an annual event at this beautiful resort in Southern California, called the Bacara. It’s in Santa Barbara. It’s consistently ranked as one of the most beautiful hotels in California, and the U.S., and the world. Amazing, amazing place. And they have this event where they bring their customers. But the problem is most companies that do customer experience really well, are dropping the ball on their employee experience. And the two go hand-in- hand. If you want your employees to deliver a world-class customer experience, they have to know what that’s like.

Now what’s interesting is at the executive level, the C.E.O. has probably flown first class more times than they can remember, and so even flying first class doesn’t feel like something special. The average call center rep, or admin person, or the person doing the bookkeeping, has barely flown in their life, let alone, flown in first class. And so how can you say to them we want to deliver a first class experience, when they have no frame of reference for this? So I’m a big believer in regularly taking your team to give them memorable remarkable experiences. Because once they have a frame of reference for it, it will be so much easier for them to deliver remarkable customer experiences to your clients. Which at the end of the day is what we’re striving for. Right?

Andrew: Yeah, I get that, and I can see how when (??) treats their employees so well, now I understand why that’s so important. It’s so that, they can then give the same kind of concern to their customers.

Joey: Exactly.

Andrew: We covered so much here today. We had to cut some things out because we wanted to keep it within the usual time frame here. But, here is where people can go for a follow-up for the things that we missed. I said at the top of our conversation that this is where they could get the eight phases the customers go through, and what we, as business owners, and as people who care about our customers can do to enhance their overall experience. Can you say a little bit more about what we missed and what you’re going to put it there? It’s actually not there now. It’s not a page that you wanted to promote right off the bat, so much as saying, this is a follow-up with what we couldn’t include here. So what is exactly going to be there?

Joey: Yeah, exactly. And to be clear, and Andrew, I appreciate that. The reason I didn’t want to put anything there yet, is I wanted to see what we were going to talk about on the call, and make sure that this helped fill in the gaps. So, what’s going to be there is a PDF that you can download that will walk you through the eight phases of the customer life cycle. What happens from the moment they first become aware of your company, through to the point where there’s zealous advocates. Now, most people, especially, respectfully in the tech world, think that the day after you sign up, you should let me know all your friends emails so that I can start humping their leg about signing up for our service too. That stays eight. We need to go through all the other phases.

So what this PDF does is, it describes the eight phases. And what I’ve done is, broken down very specific concrete examples for each of those six communication tools of things you can do in each phase to enhance the customer experience. Because one of the feedback pieces I get, is people say, Joey, I’m in it. I love it. I want to do more, but I’m not a creative person. I’ve thought about it, and I can’t come up with any unique ideas. Or every idea I come up with costs way too much money, and we can’t afford that.” This is chock full, six ideas for each of the eight phases, so I’m doing my math correctly, 48 ideas of ways that you can take these concepts and apply them in your business tomorrow. Because there’s a lot of people out there that are all about getting you to think differently.

There are people out there that are about getting you to feel differently. My life mission is getting you to act differently. I want you to start tomorrow enhancing the experience your customers have and making sure that their interactions with you are remarkable. So if you go to that URL, joeycoleman.com/mixergy you will be able to download the PDF. You’ll get it, and I’ll probably also include based on our conversation today some other bonuses and little things that will allow you to enhance the experience in the first 100 days.

Andrew: I was showing the URL because frankly there is no page there now. We were just talking about it before, and this is the page that Joey just came up with as we were talking as the place you guys can get it. Okay, it’s joeycoleman.com/mixergy. Thank you all for being a part of it, and if you use any of these ideas, if you use any of these tactics, if you use the big strategy we talked about here today and you got any wins from it, I would love to hear about it directly from you. Let me know. My email address is andrew@mixergy.com. I always want to hear about your successes and celebrate, and of course you can let Joey know. His website is joeycoleman.com.

Joey: Absolutely. Yeah, I’ll just throw my email out there. It’s just joey@joeycoleman.com. It’s not any more difficult than that. So yeah, I’d love to hear about any successes you’re having, or if you find yourself in a challenge, never hesitate to reach out. This is my life’s mission is to enhance the experience people are having with businesses around the world, so let me know how I can help.

Andrew: Well, I’m really fortunate to have been introduced to you, and thank you so much for teaching the audience. Thank you all out there for being a part of this. Bye, guys.

Master Class Toolbox

Transcript

Andrew: This session is about how to use blogging to grow your email list. It’s led by Jon Morrow. He is the founder of Boost Blog Traffic, a blog that helps smart writers get more readers. I’ll help facilitate. My name is Andrew Warner. I am the founder of Mixergy where proven founders like Jon teach.Jon, before we started you said that it took you a while to recognize the value of emails and, in fact, about two to three years after you were blogging you told me you had how many email addresses?Jon: It was like ten email addresses.Andrew: Ten email addresses.Jon: Yeah. It was terrible. I mean when I first started I didn’t even know you were supposed to have any sort of subscription box. I thought if people liked your content that they would come back, and that was a huge mistake.Andrew: In a moment we’re going to talk about the powerful thing that happened when you did learn that. But, going back in time a few years, this is 2007. You get on Penelope Trunk’s site. You do this post. What happens there? Oh, look at that, 277 comments. What happens with this guest blog post because you didn’t know what we’re about to talk about?

Jon: Yeah. That was actually my first viral post. It’s one of the most popular posts in the history of Penelope’s Blog. It got something like 100,000 visitors on the first day, and it sent about 15,000 visitors to my blog. But, because I didn’t even know about building an email list, I didn’t get a single email subscriber from that. So, you know, I wasted a huge opportunity there.

Andrew: Unbelievable. I always assume that everyone understands the power of it, especially you. Here, let me show you what I found going online, D folder. Here, this is an Internet archive. This is what your site looked like back then, 2007.

Jon: Yeah.

Andrew: I did click on the subscribe. I think some of the design is missing from this, but when I click on the subscribe what’s very clearly here is Feedburner RSS, and the closest you had to an email list was well if you want to get my RSS you can get it via email here through Feedburner.

Jon: Yeah.

Andrew: Oh, how far you’ve come since then. As a result of what you’re about to teach us you actually could today do a webinar. Do you have a sense of how many people would show up if you just said hey, I’m going to do a webinar, I’d like you guys to come out?

Jon: These days we usually max it out. I mean we usually get about 2500 registrants, and GoToWebinar has a maximum of 1000 attendees, which is the software we use. So we usually go right up to it and max it out these days.

Andrew: And it’s more than just about the fun aspect of having a big audience and a big crowd when you want to teach something, when you want to sell something through a webinar, when you want to get together with people. It’s also practically helpful for you.

You went to Mexico. Why did you end up in Mexico by the way?

Jon: Yeah. This was, what, 2010. I was having some success online. I was getting a lot of traffic. I was the associate editor of Copyblogger at the time. I was in a situation where I have about $180,000 a year in medical expenses.

Andrew: Wait. Let’s just be clear about that. How much?

Jon: $180,000 a year.

Andrew: 180, okay. From what?

Jon: Mostly I need round the clock attendant care. I have a type of muscular dystrophy called spinal muscular atrophy, and I can’t move from the neck down. What that means is I basically need somebody around me all the time. I mean if I want a drink of water, somebody has to give it to me. If I have an itch on my nose, somebody has to scratch it for me.

Because of that just around the clock attendant care expenses, that’s about 100 grand a year all by itself. Then, on top of that I need the doctor’s visits and everything that I used to do and still do. It came to about 180 grand a year.

Andrew: Wow.

Jon: The only way I could pay for it at the time, because I mean I was making… I didn’t start off making a ton of money doing this. I think I was making 40 or 50 grand. I ran into this huge problem where the only way I could afford all of those medical expenses was to be on Medicaid, and Medicaid…

Jon: And Medicaid has restrictions on how much money you can make before you have to start paying the money back. Their restriction is, they allow you, at least in North Carolina, this changes by state, and this is at that time. I don’t know if it has changed since then. But it was $800 a month…

Andrew: Oh, wow.

Jon: …Is what I was allowed to make. And then beyond that, anything beyond that, I had to write a check to Medicaid. So I remember one month I made $5000, and I had to write a check to Medicaid for $4200. I started to feel trapped because I knew that I could build a business. I knew that I was developing some really powerful skills, but I also knew that it was going to be hard for me to be able to pay 180 grand a year medical expenses as a start-up or even in the United States.

So I started looking around and a friend of mine had retired down in Mexico. He kept telling me about how great it was, how inexpensive it was. So I went down there for a week and fell in love with Mazatlan, Mexico. I moved down there because down there, an RN, a nurse with a four-year degree at a good top-of-the-line hospital, makes about $4 an hour.

Andrew: So you went to Mexico to cut your expenses while you figured everything out and saw how you could make a business out of this blogging thing.

Jon: Exactly. So, what I did by doing that, I cut my expenses from 180 grand a year to about 40 grand a year.

Andrew: I see.

Jon: And I was living in a condo on the ocean.

Andrew: Is this it, by the way? I found this photo online. Actually the team here found it online. Is this…

Jon: Yes it is.

Andrew: …Your time there?

Jon: Yes it is.

Andrew: Okay.

Jon: So that was the first day that I was there. I went out on the balcony. I took a photo, and posted that. That was from my balcony. The condo I was staying in was $1500 a month.

Andrew: Yep.

Jon: If you had a condo like that… Like right now I live in southern Florida, and a condo like that here, you are looking at probably $6000 a month plus, to rent some place like that. And I had around-the-clock nurses, and I paid for everything myself down in Mexico.

Andrew: From blogging.

Jon: From blogging.

Andrew: Blogging, building your email list, and selling what?

Jon: What I did was, at first, I was still working for Copyblogger, so I was making a little bit of money from that. Copyblogger is one of the big content marketing blogs, run by Brian Clark, or founded by Brian Clark. And I was also working for Neil Patel.

Andrew: Yes.

Jon: Which I think was a recent guest of yours.

Andrew: Yes.

Jon: And…

Andrew: Repeat.

Jon: Yes. Neil was great. I helped him launch the KISSmetrics blog.

Andrew: Okay.

Jon: So I was doing both of those jobs and then I also launched my own online course about guest blogging, which, at the time, was an unheard of concept. Nobody knew what it was. And it was so unheard of, I bought the domain name, Guestblogging.com, from GoDaddy for $7.99.

Andrew: Oh, wow. And what year was this?

Jon: This was in 2010.

Andrew: Two thousand ten.

Jon: Two thousand ten.

Andrew: Now, I want to get into the tactics that will help our audience do what you did, but I know that they are curious about how with this lack of understanding about email lists, when you started, and with the heavy expenses that you had, after you started to learn what you are about to teach us, how big did this business get for you? How much revenue are you doing today using what you are about to teach us?

Jon: So, while I was working for Copyblogger and for Neil, I launched my course, and in the first week, it was somewhere around 25 to 30 thousand dollars in sales that it made.

Andrew: Yes.

Jon: I made so much money so fast, that I had never made that amount of money before, that PayPal got suspicious and locked my account down. Because, you know, it was a huge influx of money, all in the span of just a few days. And when I finally got all of that straightened out, I went into Neil, and I very politely turned in my notice.

Andrew: [laughter]

Jon: And said, you know, you’ve been great to me. Thank you so much, but I’ve got something really big going here and I got to pursue it.

Andrew: I see the revenue…

Jon: …[??]…

Andrew: …that you have today up on the screen, your annual revenue. Do you feel comfortable sharing your annual revenue?

Jon: Sure, sure.

Andrew: What is it?

Jon: It’s $100,000 a year.

Andrew: $100,000 a year.

Jon: Or a month, $100,000 a month.

Andrew: $100,000 a month, okay, I thought so.

Jon: $100,000 a month.

Andrew: $100,000 a month, and this is from building using many of the ideas that we’re going to be talking about today. Here are the ideas that you and our team went through that we thought would be most useful for the audience. The first one is to have the right kind of Coming Soon page.

John, you won’t believe it. I remember when you did that post, and I followed the link.

Jon: Really?

Andrew: I saw that page, and, frankly, I have to be honest with you. I completely, completely dismissed it. I said this is never going to work. Because I didn’t know what was on there. Can you first, before I show a way back machine screen shot of what I saw all the way back then, tell me what I missed. What is the right kind of Coming Soon page?

I feel like such a… I think I know who’s got it, and I was so off with you at the time. What goes into the right kind of Coming Soon page?

Jon: The right kind of Coming Soon page really gets people excited about your upcoming project. But, most importantly, it has an email capture box. After working with Brian at Copyblogger I learned a ton of stuff about email, and about attention, and about marketing and selling. I saw that even our engagement numbers on email subscribers were far, far beyond what they were for RSS.

Because of that I said all right, what I want to do, I’m going to create a simple little trailer. I got a few people in social media space like Brian, and Darren Rowse, and Chris Garrett, three respected guys, to give me some quotes about who I was. I put it up with a little note down below it, if you want to join the pre-launch list type in your email address here. Yeah, it worked great.

Andrew: John, it wasn’t this. Did it look like this? I could’ve sworn this was the site.

Jon: It was.

Andrew: It was?

Jon: The way this worked, in the box up there at the top there was a video.

Andrew: Yeah, and it was your voice, and if I remember right… I can’t find this on archive.com, so I can’t confirm, but if I remember right it was your voice and text up on the screen.

Jon: Yeah, it was text with quotes from Brian and Darren. It was basically a credibility and a proof piece to prove to people that I knew what I was talking about about blog traffic.

You know, I don’t think the video was that significant. Now with a lot of my students we just do a simple text page telling people that it’s coming soon and give them an opt in box. It gets very similar opt in rates.

I mean the video was nice, but if you’re looking at this thinking I can’t get the biggest people in my industry to give me quotes, I don’t think that kind of video… It was nice. It got attention. It got some links because it was a new sort of novel thing to do. But, I don’t really think it’s essential.

Andrew: Okay. The most essential thing, of course, is that you put something on there that collects email addresses, and what? Make a point about what people get if they give the email address?

Jon: Yeah. When I was launching Boost Blog Traffic I wanted to make a point, and that was… One of the things that I noticed at Copyblogger was I was doing a lot of consulting with beginning bloggers. I noticed that people were starting blogs, and they were writing and writing and writing, but no one was really paying them any attention.

It was almost like some of them were really good, and this analogy came to mind. Let’s take a magnificent speech, the ‘I Have a Dream’ speech by Martin Luther King. What if there were no television cameras there? What if he had given that speech to an empty room? What if there was no radio, no nothing?

Andrew: Yeah.

Jon: It wouldn’t have had an impact on anyone. I think that’s what happens to a lot of beginning bloggers. They’re writing this great stuff, but there’s nobody there.

So, I had this idea. What if we gathered the audience before we started publishing? In the beginning that page, if I remember correctly, got about a 30% opt in rate, of which…

Andrew: Total number of emails, do you remember?

Jon: It was a few thousand. I switched out of that a few weeks into the launch, and I did start offering an incentive called Headline Hacks.

Andrew: And we’re going to get to that in a moment, I think.

Jon: Yup, but I got several thousand emails on for that and the whole idea was…I wanted to get ten thousand email subscribers before I wrote the first post.

Andrew: There is a shift in thinking. Most people would say, I want to bank ten emails or ten…excuse me ten blog posts so that I can keep on publishing. You’re saying, no, don’t start by writing your ten blog posts. Start by getting email addresses and then start writing the ten blog posts. Am I reading you right?

Jon: Exactly! Exactly!

Andrew: Ok, so, we see the landing page, I just thought that it was overly simplistic. I thought that was not even a site here. And that’s the part that I was wrong. You were right, in retrospect of course I understand, to just collect email addresses first. Now here is the problem that a lot of people who see this are going to have.

They are going to say, great, I have this landing page that can collect email addresses. Jon and Andrew told me that I don’t need to do a video, so I didn’t. I kept it simple, terrific…no one’s coming. And so that’s where the next part of our conversation comes up, which is to write guest posts at the slowest possible times. And you did that…where…can I even find this? Yes, look at this.

Jon: Yup, I did it

Andrew: Right here, how did you do it. What’s the slow time, and how did you get to do a guest blog post on copy…Copyblogger at the time.

Jon: So Copyblogger…I was an associate, I did it there too, but I still didn’t have enough influence to like, for them help me launch my blog. You know, they weren’t going to take an entire week and give it to me to help me launch. So I thought about it and on the week between…the week before Christmas, I think it was, they always took the week off and never published any content.

Jon: It is, and the traffic usually goes down by 30-40 percent. But I noticed that there was nothing on the calendar, for that week. and I said, why don’t you allow me to write an entire series of posts about headlines. And take the whole week, and so I wrote a post every day during that week and entirely monopolized the attention of a blog with over a hundred thousand subscribers at the time. And I did the same sorts of things on Portblogger and on other sites, where I find the time.

If you go to a blog and they don’t accept guest posts especially, try to find a time where, with Darren, if I remember what I did with him, when I wrote my first guest post for him. I noticed that he was going on vacation, and he said that he needed to collect a certain number of guest posts on Twitter before he went on vacation. So I emailed him, and I said why don’t I write you three guest posts. You can take off an extra three days off on me. And so you got to look for those opportunities where other big sites may need content, and then jump in there throughout the week and make sure that you do a really do a good job so they’ll invite you back.

Andrew: So, John, you were able to contact Brian because you were essentially on the staff. You were inside their system Darren happened to tweet. But what if we don’t have those types of connections or if Darren doesn’t happen to tweet. How do we find contact information for sites so we can pitch our guest posts at them.

Jon: The good thing is, now guest blogging is much more established than it used to be. So most of the big sites that accept guest posts. They have guest post or writer guidelines. They’ll tell you exactly what they are looking for. So the first place to start is to just go to Google and type the name of the site and then guidelines, and usually they’ll come up.

Andrew: Let’s try right now.

Jon: Okay…

Andrew: What makes a great Copyblogger guest post…?

Jon: Yup…there you go.

Andrew: And then use the contact form here. Okay .

Jon: Yup. And the other way, if you like, I actually have a list of the 100 best blogs to guest post for. I’ll be happy to give that to you and your audience and you can post it that or whatever.

Andrew: I would love that.

Jon: So you can just go directly to that, and it even has links to all the guideline pages and that makes it really easy.

Andrew: Oh, that’s fantastic, how do I get that?

Jon: I’ll email it to you.

Andrew: Okay.

Jon: And you can post it then.

Andrew: Yeah. I know it for me it helped out tremendously in the beginning of Mixergy to publish excerpts of my interviews on Mashable, but I happen to know Pete because I was organizing events with him. I didn’t know many more people than that. I didn’t know O. Malik [sp]. I didn’t know Brian Clark. I didn’t get to meet Brian Clark until about this year.

Jon: But that does really key into one of the most important things.

Andrew: Mm-hmm.

Jon: And that in my opinion relationships and connections precede content. So before you really start getting a lot of traffic to your content, usually you have to know somebody that will link to it for you. So in the beginning of your career if you’re really doing these things, taking a lot of time to do these things like interviews or guest posts is really essential and networking, going to conferences. If you don’t do those types of things, it’s much, much harder to get any traffic to your content.

Andrew: Were you going to conferences too?

Jon: I wasn’t. At the time I couldn’t.

Andrew: That’s what I thought.

Jon: Because it’s very difficult for me to travel. But what I did was a lot of online events. So whenever somebody would do an online event, like a . . At the time it was like tele-seminars, and it was just starting to get into webinars. So I started doing a lot of the tele-seminars and webinars. And . . .

Andrew: All right. I want to get into how you did that.

Jon: Yeah, yeah.

Andrew: Here’s another aspect. I keep wanting to break down what you did because I feel like you grew in front of my eyes here. The next thing is do a webinar for someone else’s audience. How does that work?

Jon: Yeah, so this is probably where I got the majority of the email addresses during my launch.

Andrew: Mm-hmm.

Jon: My big launch piece was talking about headlines and teaching people how to write better headlines for the [??] press. And what I did was I put together a webinar on that topic that went down through the most popular headlines, and I gave them different tests that they could use to decide whether or not they had a good headline. And then at the end of it I developed a headline show where I’d stay on at the end of the webinar and write people’s headlines for half an hour. And people just loved it. It was like a magic trick.

Andrew: [laughs]

Jon: Because when I started working there, Brian told me how important headlines were. And he told me, “I want you to write a hundred headlines every day.

Andrew: Really?

Jon: That’s what he told me. And what I didn’t know is he told that to everyone that started there.

Andrew: [laughs]

Jon: I was the only one that actually did it and took him seriously. And so over a year I wrote 35,000 headlines. And I got so good just because of how much practice I had at writing headlines that now somebody can give me a topic, and I can spit out a really good headline pretty quick.

Andrew: What headline would you give this conversation?

Jon: So it could be something like “11 Secrets of a Blogging Genius.”

Andrew: Okay.

Jon: Or it could be “11 Warning Signs You’re Starting to Go the Wrong Way.” All different. You can take negative angles, positive angles, for some people whatever, and, yeah, I got good at redoing those really quick. And because of that, after I started to launch Headline Acts which is a 50 page document teaching people about headlines and giving people different headline templates, AWeber invited me to do one for them. Copy Blogger wanted me to do one for them.

Andrew: A webinar for their audience.

Jon: For their audience.

Andrew: So the idea is here, I’ve seen it on different sites here. This is one, optimizing web content webinar by Jon Morrow, How to Create Irresistible Titles. This is one of the webinars that you did. As I was Googling around, I found it. So this person, this site, SkyWord.com does a webinar with you. They get their members to come and watch and participate. Here’s the registration button right there, right? You end up with people’s attention, but I guess what happens when they click here to register they give you their email address to, right?

Jon: That was the deal. So instead of trying to sell something on the webinar, the deal was, I would provide them outstanding content but that I would be able to put anyone to join the webinar on my e-mail list. And what I did to be fair, because you never want to surprise people by putting them on an e-mail list they don’t want to be on, is I would always email after the webinar was over and say, “by the way, I am going to start e-mailing you some more tips once a week. If you’d like to get those tips, stay on the e-mail list, if you don’t want to get those tips, click the unsubscribe link to opt out.”

Andrew: I see.

Jon: I usually kept 80-90% of the people who registered for the webinar, because they loved the content. On the average webinar, for the one on Copyblogger, I got, I think about fifteen hundred e-mail addresses.

Andrew: Wow.

Jon: For AWeber, I got over a thousand. For some of the other blogs I can’t remember, but even some of the smaller blogs, I was getting 200, 300 mail addresses. When you start looking at it, I started measuring, what are the things that I do that get the highest number of e-mail subscribers per hour?

Andrew: Yes.

Jon: Webinars beat everything because I could get 300, 500, 1,000 subscribers in a one-hour webinar.

Andrew: So if we’re going to do this, we find something that we do especially well. In your case, headline writing. For me, it’s how to interview for someone else. It might be how to install all the perfect plug- ins on a site, or how to use a certain kind of CRM. We have our topic, it’s time to go to bloggers and say “will you do this with us”? What’s in it for them? I see how you get e-mail addresses, what’s in it for them if they promote you and help you grow your list?

Jon: Great content. It has to be a really, really great piece of content.

Andrew: But they don’t get the e-mail addresses too? There is no check box that says it’s going to the site, Copyblogger and to the person John?

Jon: Nobody ever asked me for that, but if they had, I would have said “yes”. I wouldn’t have had a problem with that.

Andrew: I think I’ve seen that happen at other sites, where the incentive for the other website is great content and a way for them to grow their mailing list.

Jon: Yup. Part of it was, number one it was a killer presentation, so when I did it for AWeber, at the end of every webinar they do a survey to see how much people liked the webinar, and it was the highest rated webinar they had ever given at their company. So, part of it starts with really, really great content. It has to be a presentation that knocks people’s socks off. Once you do that, every blog that I wanted to do another webinar for I would just send them one of the ones that I already did, and they would watch it and they would say “wow, that was amazing! Sure I’d love you to do this for me.”

It all comes down to the great content, and if I were a beginner, there are some things that are different. If I was starting over and nobody knew who I was, I probably wouldn’t be able to get those top sources. I probably wouldn’t have been giving webinars on Copyblogger or Aweber, but I could have done smaller sites, and even if you get a hundred or two-hundred e- mail subscribers in an hour, it’s unlikely you’re going to get 13,000 e- mail subscribers in 60 days like I did. But, even if you get a thousand, fifteen hundred, that’s still a lot better than most bloggers do.

Andrew: I saw that Derek Halpern was doing that when he got started.

Jon: Site reviews of some…

Andrew: Yes.

Jon: He would do a site review and tell them all of the convergent things that were wrong with their site. Derek is a great presenter.

Andrew: Do you have any advice on how we can become better presenters or better at webinars? Is there a book or a resource where we could go to learn the framework that will allow us to create these kinds of webinars?

Jon: What helped me the most, believe it or not, was watching Ted Talks, because those are some of the best presentations of some of the best speakers ever. I would just watch them and try to dissect what they were doing.

Andrew: What’s one thing you learned by dissecting them?

Jon: I learned that most speakers, it’s almost impossible to be too concrete, to offer people enough examples of what you’re talking about and most webinars are far too theoretical and they’re talking about strategies, but they’re not actually giving people something that they can see. So what you’re doing now, the way we’re dissecting everything, that’s dramatically more valuable to people, so that was one of the biggest things.

Andrew: Yeah, most guests who come on here don’t understand why I’d want to show this, for example, why it would be important for me to do a search and find how Copyblogger finds guest posts, but as an audience member, I’m curious about that. I want to actually see the example. I don’t just want to hear that I should be doing events with other bloggers. I want to see the actual webinar, and I want to see that this is how you’re collecting the email address, and I want to see the reactions to the blog post – where was that? There it is, Penelope Trunk. I don’t just want to hear that you say it’s massive. It’s kind of cool for me to see 277 people even commented. By the way I didn’t show this thing. This is the landing page you used on the post we talked about earlier, right?

Jon: For headline hacks?

Andrew: For headline hacks, right. So Copyblogger did . . .

Jon: So yeah, I launched that on Copyblogger.

Andrew: This was Copyblogger, then this is the landing page you led people to if they liked your content on Copyblogger enough.

Jon: Yup.

Andrew: And it’s changed over time, but essentially, this is it.

Jon: This is it. It’s very similar, and this gets about a 56% opt-in rate, which is pretty good.

Andrew: And that’s because it uses . . . I can tell; that’s a lead page. Leadpages.net page, right?

Jon: It is.

Andrew: Yeah, they do over 50%.

Jon: Great piece of software. So yeah, I use that. It makes it very easy to set up a page like that. And also I found the magic thing that my audience wanted, which was a cheat sheet for writing about [??]. Notice I didn’t say anything about headlines and the title.

Andrew: “The Cheat Sheet for Writing Blog Posts that Go Viral.”

Jon: So I talked about the benefit of the thing rather than what the thing is, which is a big mistake a lot of the others make. But that little guide I put together, I still use that to this day, and it’s responsible for probably 95% of my email list.

Andrew: Wow. The tool there is leadpages.net, but there are other ways to do it. Unbounce is a really good tool for creating pages like this. What else? OptimizePress I see a lot of. All right, on to the big board. The next big point is: you’ve got to prove yourself, prove your results, and build a network of influencers. Give first to prove yourself, and you did that, speaking of examples, with Darren Rowse, you did a post called “How to Quit Your Job and Move to Paradise.” Here is the post. This is ProBlogger. There is your name right there. So, how does this help you prove yourself to him and to other influencers.

Jon: This is maybe the best article I’ve ever written, which is another mistake that a lot of the others make. They try to hold back their best stuff for their own site. My opinion is in the beginning, when your blog is new, you need to be giving your best content away to other big sites where it can get the biggest audience possible, and then link back to your site and build a relationship with that blogger. So this post, I was pitching myself as a traffic expert. To do that, I need to be able to write posts that get lots of traffic. So this post got . . . it’s up over a million visitors now that have come to this, over a million page views. It’s the most popular post in the history of ProBlogger, so over seven or eight years, there’s never been a post more popular than this.

Andrew: Unbelievable. It’s about your accident.

Jon: It is. It is basically my story.

Andrew: This is the accident.

Jon: Yup. So that’s what started off my whole blogging career, was that accident, and I have a picture of my view from my balcony.

Andrew: Your office.

Jon: Yeah, my office. And then I didn’t reveal until the very end that I’m in a wheelchair. And the post went viral – incredibly viral – and because of that, to this day I have a relationship with Darren. And it was maybe a month after we published that post that I went to Darren and I wrote a quote for him, for my coming soon page that I wanted, and it’s that I am one of the top writers on the web. It is what I wanted him to say.

Andrew: Ah. I heard that you’re supposed to do that. Write for the person who you’re asking for the testimonial from. So you’re not handing them a homework assignment without any direction. You say, “If you believe this, this is what I’d like you to say, and you can rewrite any way you want or change it.”

Jon: Yeah, so I gave them to him. I think he did change a few words around, and I just read the most popular post on this site. How was he going to say no to that?

Andrew: What?

Jon: How was he going to say no?

Andrew: Right. After doing that?

Jon: After doing that. So whatever you’re trying to teach people, be genuinely good at it and don’t do a public demonstration. I call it a public demonstration of your magic powers. So whatever you’re doing by getting traffic is utilizing your magic powers. So I wanted to go publicly demonstrate that. I think I spent more than 50 hours on that post.

Andrew: Fifty hours on that one post.

Jon: Just tweaking every aspect of it. I wrote it with the intention of going viral, knowing that it would probably go viral. And crafting it until I was absolutely certain every word of it was as good as it could be. And, I mean, the result was over a million pages.

Andrew: Neil Patel did something similar to that. He told me in his first Mixergy interview he went to TechCrunch and said, “Can I help you get more traffic?”

Jon: Uh-huh.

Andrew: And they said, “Well, that’s interesting.” He said, “Look, I’m a SEO expert, and I can do some things to your site to help you get more traffic.” And at the time no one knew SEO, so he was able to make small adjustments, and I remember asking him, “So that’s all you did?” “Pretty much, people don’t know what to do.” Today we’re more sophisticated. Back then we weren’t. And as a result, that’s how, I think, I know that’s how he got the quote from Mike Arrington, the Founder of TechCrunch.

Jon: Yeah.

Andrew: I see a few different ways to do that, and this is what you mean. Prove yourself to the person first.

Jon: I mean, you mentioned Derek Halpern, what he did with the site reviews.

Andrew: Mm-hmm, yes.

Jon: That was a public demonstration of his magic powers. So, yeah, it works.

Andrew: This is the other thing that I noticed. I’m going over to my second computer here. Let me show the screen. This is the post that we talked about earlier.

Jon: Mm-hmm.

Andrew: Where is that? Yeah, so you’re listed as the person from Copy Blogger, but the link is check out his free videos on guest blogging. When I click on that, I end up here. So, again, unlike most guest bloggers you’re not linking to your blog. You’re not linking to your home page. You’re linking to a page where people can give you their email address.

Jon: Yeah, and this was one of the key ways that I made money back in the early days by linking to an opt-in page and then that opt-in page leads to an auto responder sequence. I was making an average of $7,000 per guest post.

Andrew: Seven thousand dollars per guest post. Were you selling just your own course on blogging . . .

Jon: Just mine, of course.

Andrew: . . . or were you doing not even affiliate programs.

Jon: Not even affiliate programs. So the course is $600. That opt-in sequence gets about 6% of all email subscribers to convert. So, you know, if I drove a hundred subscribers, for example, to that I could get six sales. That was $3600. On average I got about 200 email subscribers per post so that’s over 7,000 bucks in sales.

Andrew: That’s amazing, and that’s something that it doesn’t look like it, it looks so simple. I think a lot of times when people see this . . . I’m not even zooming in. I’m going to zoom in now. This is what it looks on the page.

Jon: Mm-hmm.

Andrew: It just looks so simple. It’s like you’re almost not ready, you don’t have it. But you do. You have the cheat sheet that people who are in your demographic your target audience want and the simple way of getting their email address. I love this. I try to advocate this as much as possible. No one wants to go to a blog post and have to fish out what post they should be reading or happen to read the latest post and judge based on that.

It’s your email that I think is more important.

Jon: Yeah, and it . . .

Andrew: You do this way better than I do. I’m just in admiration of how you’re doing it, but I believe in the same thing here for Mixergy.

Jon: Yeah, I got a lot better at this when I was down in Mexico when I had to survive. I had to make enough money to pay for everything on my own down there. But, yeah, that post from Poor Blogger it made . . . When I stopped counting it was at $32,000 in sales. Just from that little link. That’s all. So, yeah, it’s a way you do have a product that converts. That is one of the requirements, but, yeah, you can make a fantastic amount of money per guest post. And I’ve learned that, by the way, from Neil Patel who I will give credit that used that strategy before I did to promote KISSmetrics.

Andrew: He used to go and guest post on other sites. Well, have other people guest post on other sites put a link back to the a landing page where he collected email addresses and then do his sales.

Jon: Yeah, what he was doing at the time when I was working with him at KISSmetrics was he’d guest post on the marketing site and then he would, he would give away free trials to KISSmetrics and then if you stayed past 30 days it was $99.00 a month so I mean you know let’s say he got a hundred people to sign up and let’s say fifty of them stayed that’s fifty people at $100 a month that’s what five grand a month off of one guest post.

Andrew: $500 a month.

Jon: Ten or fifty people at $100.

Andrew: Oh it’s $100. I thought you said $9 a month which just didn’t seem right to me.

Jon: No, it’s $100.

Andrew: Yeah, it’s $100 right, that’s an expensive product.

Jon: Yeah, 99 dollars. So, yeah five grand a month off of a guest post.

Andrew: As I understand it, he had other people guest or ghost write his guest posts.

Jon: Yeah.

Andrew: Yeah he’s a (??), that guy.

Jon: He is, he’s good at.

Andrew: Were you one of his ghost writers?

Jon: I never was, I never was. I served as the editor and chief of KISSmetrics for the first three months, that was up until I resigned with all of my guest blogging stuff but, but yeah that’s what I was doing. By the way Neil never told me to do that, I just noticed him doing it and I said you know that’s a really good idea, I ought to do that. That’s the way you learn most of the best stuff is by watching smart people.

Andrew: And now we’re all watching you and learning from you. Here’s one other thing that I learned from you say use a feature box at the top of your site, that’s the one that converts highly for you. What is a feature box?

Jon: I got to give Derek Halpern the credit for this one

Andrew: Yeah

Jon: I didn’t of this idea, I have evolved it a little bit but the idea is at the top of your site you usually have a logo and a menu, down below that most people start giving away their blog posts what you need to do is in between your menu up at the top and your content you need to have a box all the way across the top where you ask for people’s email address. It’s the best real estate on the screen, it’s where if you look at tracking studies it gets the most attention so put your request for an email address right there front and center on the best real estate.

Andrew: Here it is on your site, it’s this gray box and I’m going to zoom in so people can just see that. This is it, again your offering the chi chi (sp) for writing blog posts that go viral.

Jon: Yep, so it gets about 9% of new visitors to the site.

Andrew: Okay.

Jon: Subscribed to that which is a fantastic percentage and so that means if we round it up to 10% if I get a thousand new visitors in a day then I pick up a hundred new subscribers in a day.

Andrew: 1 in 10, that’s really high. What is this that I see in my notes that I should be asking you about an un-pop which is in beta?

Jon: So, we have a product called Unpop, that is in Beta that actually allows, makes it really easy to collect email addresses and it’s at unpop.com. It is in Beta, we’re not currently selling it at the moment, so all you can do is sign up to (??)

Andrew: Of course. How does it work?

Jon: What it does is, it actually slides up in the bottom right hand corner of the screen which it will eventually show here on the video.

Andrew: I’m looking to see if it’s in there.

Jon: Instead of covering your entire screen like a pop-up does all it does is slide up and animate up into the bottom right hand corner, kind of like a little sticky note.

Andrew: Got it.

Jon: In the bottom right hand corner of your screen and it asks for your email address and we’re also working on allowing it to work with the feature(sp) box on blogs as well.

Andrew: I see. The main idea is people are coming to the site, capture their email addresses and you’re trying a bunch of different tactics for doing it, one of the best ones for you is the feature box right along the top and you’re working on creating a way to make it easy for people to do that another way is the unpop up box and I actually asked you before the interview started, I said is there a plug-in that you recommend for putting a feature box up? You said, “That just doesn’t exist. We’re going to have to teach the course without it.” We had to code something like that for us. It looks like it’s something that you’re thinking about creating. No firm date for when it’s going to come out, but people can check it out at GetUnPop.com.

Jon: It’s being planned. Just to give a point of comparison, we did a survey of a lot of my beginning blogging students in my guest blogging program. We had them check what their opt-in subscription numbers were when they had that little box in the sidebar.

Andrew: That’s the box that everyone has, the sidebar box asking for an email address. Webber includes a bunch of those with every membership.

Jon: The average was .5%.

Andrew: .5%. Less than one percent.

Jon: Less than one percent. Amongst my students…I don’t know if that goes out to everyone else, but for amongst my students, that’s what it was. Compare that to 9% in percent. If you get 10%, you’re getting 20 times increase in your email list growth. When you have that half a percent opt- in rate, people don’t realize. They say, “I need more traffic.” Not necessarily, because if you put more traffic into a site and they don’t subscribe, it’s like pouring gasoline into a gas tank with a hole in it and then trying to go somewhere.

Yes, you can pour in more, but you’re just going to lose it again. Try to start collecting the traffic you do get, and building a relationship with them, and then getting them to come back. After that, you can start building your traffic.

Andrew: When you have .5% of people who hit your site giving you their email address and sticking around and building a relationship with you, it doesn’t really pay to go out there and get more traffic for the site. But when you get 9%, then every 100 people you bring over equal nine new subscribers, meaning you just keep getting to grow and grow. Let’s take a look at the next big point here, which is to incentivize people to promote you with affiliate relationships for your product. How do you do that?

Jon: This is the other big place I’ve gotten a lot of subscribers. A lot of people feel they have to wait until their blog is really big to launch a product. Again, I did things in reverse, and it ended up being more successful that way. I launched my guest blogging program before I launched the blog. One of the reasons why was…

Now, I still to this day give webinars for my guest blogging program. And people are incentivized to let me do that webinar because they get a 50% commission on all of the sales. With the webinars, on average, it converts ten percent, so on average they end up getting… I forget what the numbers end up being, like $24 per registrant that they send in.

Andrew: $24 per person who just registers, not even for viewers?

Jon: Mm-hm. Yep.

Andrew: I see. Now, you don’t just say, “I will do a webinar for you, I’ll get you great content.” You say, “I’m going to do a webinar for you. I’ll get you great content, and I will sell some of these people on my course, and we’ll split the revenue.”

Jon: Yep. Sometimes… When I first started, I didn’t even tell them. They’d say, “There’s no way you convert that well.” I’d say, “I’ll write you a check, after you promote it, for the exact amount.” We don’t even have to see what the sales numbers were. I had several affiliates who would drive 1,000 people, and I’d get 1,000 registrations. I’d write them a check for 24 grand. That was it.

Andrew: Unbelievable. What do you say that’s so magical? Where do I go see these webinars?

Jon: You have to attend one.

Andrew: How do I go to attend one? What website are you doing one with now?

Jon: Here’s the thing. Here’s another thing I do. I only do webinars to people on my email address, who are core affiliates on my email list. So about once a week, sometimes every other week, we do a webinar. If you’re on my email list, it boosts blog traffic. The ones we’re doing now, we average about $50,000 in sales per webinar that we’re doing now. They convert really well. Like anything, it’s about practice. I’ve done hundreds of webinars now. I study other people’s webinars. I study great speakers. When I started, my webinars sucked. I didn’t make anywhere close to that amount of money, but as I’ve gotten better at it, now it’s fine-tuned and it works really well.

Andrew: What do you do to keep track of how much money you get and how much money your affiliate gets?

Jon: We use InfusionSoft right now which is really advanced, CRM, email, shopping cart sort of program, sort of a do everything program.

Andrew: So with Infusion Soft when someone registers their email address in a form you can tag them with the affiliate, and then at the end they’ll do the math and tell you, “This tagged affiliate brought in that much money.”

Jon: Yep, so it will calculate it for you, but we also double check it after the webinar. We have someone manually go through all of the customers and check their tags just to make sure everyone got their commissions.

Andrew: I see.

Jon: So it works well and, you know, it’s an advanced program if you’re a beginner and you don’t have anybody for that. There are other affiliate programs that you can use that are much cheaper. I mean, [??] has a cheap one. OneShoppingCart is . . . I started with OneShoppingCart, UltraCart. There are lots of others out there that you can use too.

Andrew: This is one of those pages that you’re using today. This is what it looks like.

Jon: Yep, and that one was . . .

Andrew: Oh, actually, this one is from 2011.

Jon: Yep, this is a while ago. This is with Derek Halpern’s webinar bridge product which I don’t even know if he’s offering that one any more. Nowadays I do it with LeadPages, [??] those webinar pages.

Andrew: LeadPage for it and LeadPage keeps track of everything.

Jon: Yep, so LeadPages integrates with GoToWebinar. So when people sign up for the webinar it, adds them to my email list, puts them on an auto responder sequence, and it registers for the webinar all at the same time.

Andrew: That means every time . . . I’ve been playing around with InfusionSoft. That means every time you want to do another webinar for someone you have to create another form in InfusionSoft. Let me bring my camera up.

Jon: Yes.

Andrew: Another form in InfusionSoft, add the tag to that form, and then create a copy essentially the LeadPage you’ve used before, make some changes, and connect that to the form you created.

Jon: It’s a process. We have a check list that my staff goes through now to be able to do it all.

Andrew: You must.

Jon: It’s like a hundred steps or something to get it set up. It takes an hour or two to get it set up, but, yeah, if you get it all set up right, it is an advanced thing. You do have to be really good at public speaking. But if you get good at it, it can virtually do well.

Andrew: All right. On to the next. Oh, wait. If you don’t sell in that webinar, do you then give . . . If you sell to them in the future, a year in the future, half a year in the future does the person that sent you that email address still get a commission?

Jon: Yes, it’s forever.

Andrew: Wow.

Jon: So my philosophy about affiliates is I want to send them as much money as possible, and the reason why is I want them to provide multiple times. So now I have multiple webinars. So even if I do a webinar once and someone doesn’t convert, I have another webinar and another month that they get invited to that sells the same product from a different angle.

So the number of people that convert is enormous over time because I keep coming back to them with more content. I’m not coming back to them with more and more blatant sales pitches but just more and more content with different angles and different ways that will help them. And, yep, so that’s how we do it and, yeah, I mean, we send a nice little mass pay every month to everyone.

Andrew: That’s nice to have all these people do well because they’re affiliated with you.

Jon: Yeah.

Andrew: It really does incentivize them. On to the next big point, the final one which is to go to blogs that publish resource lists and email three to five influential people for each of your posts. How does this work?

Jon: The way that I look at this just to get another dramatic metaphor is what a lot of the bloggers do is they write a post, and then they just leave it.

Andrew: Hmm.

Jon: And they go on to the next post. Well, in my opinion that’s an enormous mistake. What I do and what I tell my students to do is think of your purse like children. When you have a new child, you don’t just say, “Well, that was fun and set them down on the ground” and walk away. You take care of them. You help them grow. You guide them until they build a life for themselves, and that’s the way I look at my blog posts. I want to create a really good piece of content, and then on average at least, what I do is I’ll look for five sites that have resource lists…

Andrew: Um-hmm.

Jon: …like five best resources on Google+, or whatever. Whatever the topic is. If you do a search on Google for the topic, and then resources, it almost always brings up at least two pages.

Andrew: Here, so let’s do that right now. I’m going to zoom in again, and I’ll read this out just in case because I know that it’s hard to see Google searches on a screen. So it’s just resources, you said Google+?

Jon: Yep. It’ll find some. That other search parameter is another way to find it that works even better, but yeah this works too.

Andrew: So this one I think because we did Google+ it doesn’t work especially well, why don’t we do resources, pod casting?

Jon: OK. That’ll work.

Andrew: Got to spell it right first, there it is. Pod casting tool box, 70 pod casting tools and resources. So, I see this on Mashable, I see this on a couple of other sites. What do I do with this now? 25 pod casting tools and resources from PracticleEcommerce.com is another search result. What do I do with them?

Jon: I would email either the author or editor of the site, and say “I found your resource list. It’s fantastic. I have another resource for you that gives everyone up-to-date information on podcasting. Would you like to see it?” And usually 20% of them, so if you pitch five sites, probably 1 of them is going to come back and say yes they’re interested. And then you send it to them, and if they say yes usually you get the link. When I was a beginner, I didn’t just do five, in my opinion the bare minimum, I’d do 50, 100 different sites for every single post. And that’s where all the traffic came from in the beginning.

Andrew: So if you do a post on how to write headlines that go viral, you will look for resource pages on headline writing and you’ll email the author of them, or the editor of the site and say “Here is a great post that… I love your resource list and here is an addition that I think might make it even better” and then you send them a link to yours.

Jon: Mm-hmm! So that’s just one way, I mean the other way is think about who are the great experts on this topic. For that, I may go on Twitter too and hit up some of the top SEO people. Because Google+ is a big part of SEO. So you’ve got to think about who are the influencers related to this topic. And number one, let them know in a friendly, non-pushy way about the content. But the other thing is build a relationship with them too. Now, fast forward six or seven years from when I got started, now I know a lot of the top people. I added it up, somebody asked me the other day about how I was promoting, my closest friends on Twitter have over 2 million followers combined.

Andrew: Mm-hmm.

Jon: So that means if ever I want to push a post, I can ask any of those people for a link and if it’s relative to their audience, they’ll give it. So that makes it extremely easy to get traffic. So building those relationships, it took me six or seven years. But once you do build it, it stays a resource forever.

Andrew: Now I want to ask about this in URL parameter, but first, when you say that you did 100, you can’t type, right? You’re not moving your fingers, how are you doing it?

Jon: I use voice dictation software.

Andrew: Oh my goodness! That means it takes you even longer than it would me to do it!

Jon: Well I’ve gotten pretty good at it…

Andrew: Okay.

Jon: ..so I might be able to do it even faster than you do it now.

Andrew: I see.

Jon: But I do that. I also have a custom built lip operated mouse…

Andrew: Okay.

Jon: …that I use that a guy built in his garage for me. So yeah, I can do everything on the computer pretty much just as well as anyone else. What I do with the post, when I was a beginner, I would take whatever amount of time I spent on the post, and I would multiply it times 10, and that was how much time I spent promoting the post. So if I spent five hours writing a post, I spent 50 hours promoting the post. Now that my blog is big, it’s the opposite ratio. But in the beginning, when you’re just trying to get your tribe started, I really think people don’t put nearly enough effort into promoting the good content that they’re publishing.

Andrew: I think you’re right. I know that I need to be spending more time on that, and you’re really selling me on it. Here’s the thing that I started typing in before, what is inurl resources, no spaces, then I would put in, let’s say, podcasting at this point. No need for the word search. Just like that.

Jon: Yeah. What that does is that searches for URLs where there’s the word resources in the URL.

Andrew: Right, I see.

Jon: Another one is in-title, so if you do in-title resources it’ll show pages where resources is in the title of the page.

Andrew: Yeah, so in-title brings up Mashable’s podcasting toolbox, 70-plus podcasting tools and resources. A lot of this we saw earlier. What else is it? If it’s inresources, how about audio recording? Recording and music production resources, got it. Audio recording center. All right, and then I just keep looking. Useful links, resources related to audio and video recording, got it. Wow.

Jon: That’s by far the easiest place to get links. Brian Dean taught me that. He’s a brilliant SEO guy. The reason why is those are people that are looking for links. You feel like a lot of times when you ask for a link that you’re bothering somebody. Well, these are people that you’re helping them keep their guide up to date, so you’re doing them a favor by emailing them your content. It makes the whole relationship much better.

Andrew: All right, we’ve got a bunch of great ideas here. I’m going to follow up with you to get the list of places where we can get guest blogging opportunities.

Of all of these ideas that we’ve gone with, if someone were to start with one and say you know, I just want to see what works, I want to just get a little bit of a bump, which of these would you recommend they start off with? I guess Coming Soon page, if you haven’t started you’ve got to do that.

Jon: Yeah, yeah, you’ve got to start with an opt-in page of some sort whether it’s a Coming Soon page, or if you have an incentive to offer people to join your email list, that’s great. But, at the very least start with the Coming Soon page. Then, I would drive traffic to it with guest posts.

Andrew: And guest posts.

Jon: Yeah.

Andrew: Can they go to… I bet to get a feature box they could probably go to elto.com. Until you create the plugin, they could go to elto.com and just pay someone there to add it to their theme.

Jon: Yeah. I mean it’s pretty cheap. If somebody charges you more than $50 to do it you’re probably paying too much.

Andrew: More than $50, so $50 or less is what we should be paying a developer to do it.

Jon: Yeah, probably so.

Andrew: All right. By the way, I do talk to a lot of people who I give advice to on how to do interviews, and I see this over and over. They say I want to bank ten interviews, I want to bank 20 interviews, and then I’ll roll them out. That way I know I could be consistent with it.

I know from my experience that they should publish the first, get some feedback, get some traction, then do the second. I have all kinds of reasons why they should do that, but I hear so much of it that I’m thinking maybe I’m wrong, maybe they’re not listening to me for a reason. What do you think I should say to someone who says I want to bank ten interviews before publishing my first?

Jon: I think that instead of trying to be perfect in the beginning it’s better to iterate and get feedback. I mean in some ways that’s why the Coming Soon page works, because it’s something that you could set up in a few hours and you can start driving traffic to it and getting subscribers.

Then, as they come in, the other thing that happens with a lot of bloggers is they start getting feedback from people that come to their Coming Soon page and subscribe, and they completely change what they thought they were going to blog about just based on what people were saying.

Andrew: Yeah.

Jon: So, I think giving yourself permission and even expecting to course correct once you start to build that audience and once you start to find out what they want, that’s iterating based on learning what your customer wants. It’s very similar to building a company.

Andrew: Yeah.

Jon: You hear about the lean methodology. Following a lean methodology with your content is a really smart thing to do.

Andrew: All right. I think a lot of people in my audience are going to be cyberstalking you and just trying to figure out what you’re doing and deconstruct it. The best place for them to start after having gone through this conversation, I can say for sure, is to boostblogtraffic.com and enter their email address right here.

If they do, I don’t think it’s going to make a dent in the number of email addresses that you have. You’re already sitting on a really big pile. But, what it’ll do for my audience is it’ll allow them to see how you engage your audience, how you follow up with someone who submits an email address. They’ll see your writing and they’ll see what you do, what’s that magic that gets people into a webinar and gets them to buy from a webinar. I really hope people will go and do that.

Thank you so much for doing this.

Jon: Thank you. It’s been an honor.

Andrew: This is fantastic. It’s great to meet you. Thank you all for being a part of it. If you got anything of value from this interview, please find a way to tell Jon. I’m going to do it right now. Jon, thank you, I got a lot out of this interview.

Jon: Thank you.

Andrew: Thank you. Thanks for teaching my audience in this course. Thank you all for being a part of it. Bye guys.

Master Class Toolbox

Transcript

Andrew: This session is about how to launch your idea. It’s led by Scott Duffy, founder of SmartCharter, an online booking tool for private aviation which was acquired by Richard Branson’s Virgin Group.This session is based on the ideas from his book. Let me hold the book right up right here. “Launch”, the critical 90 days from idea to market. I’ll help facilitate. My name is Andrew Warner. I’m the founder of Mixergy where proven founders, like Scott, teach. Scott, welcome.Scott: Hey, it’s great to be here. Thank you for having me. It’s great to be on the show.Andrew: It’s great to have you on here. I just saw this article. This is an old post from TechCrunch from 2007 by Michael Arrington announcing how Virgin Charter, Richard Branson’s company is launching a new product, and the backbone of that is Richard Branson’s acquisition of your business. You created a product for your users, and what did they say when they first got to play with it?

Scott: Well, it was interesting because we had this idea, and we had a bunch of smart people on the team that really felt that we had the perfect solution for a problem that we’d identified.

Andrew: Uh-huh.

Scott: And the problem was that no one had really effectively aggregated supplying demand in the airline, in the private air charter business. So the big idea of private jets.

Andrew: Mm-hmm.

Scott: And we went about creating a product roadmap, building the, you know, an alpha version and a beta version. We went out and we talked to lots of customers. We talked to stakeholders on both sides of the table. We talked to operators that wanted to basically sell time on their aircraft, and we talked to buyers, people that actually wanted to fly on those aircrafts.

Andrew: All the things that you’re supposed to do, talk to everyone, get their feedback, yeah?

Scott: That was it. And the more feedback that we got, the more convinced that we were that we were on the right track. And so we started building and building and building, but kind of a crazy thing happened. We finally had our first version ready to take to market, and we got it in customers’ hands. These are the same people that told us to deliver exactly what it was we built.

What we found is, again, once they started to play with it and really use it, they wanted something that was a lot different. What they learned is there are different aspects or different features of the product that they thought that would be more helpful. And so where we were focused on building the back end of the product, what we learned is that our customers really wanted more assistance once they used it on the front end.

And one of the lessons I learned in that experience as an entrepreneur is, you know, instead of building everything, instead of trying to make things perfect, it’s important when you’re launching just to get out one thing, the simplest thing, like what we call the minimum viable product. Get it into people’s hands and get them using it because sometimes buyers are liars. Not because they want to mislead you but because when they start to actually use it they make new distinctions.

Andrew: All right. And that’s a good point to start off with, and we’re going to talk about how to do this right, and we pulled out the team here at Mixergy, pulled out some ideas from your book to talk about.

Scott: Cool.

Andrew: The first one is to change your mind, change to the mind of a beginner so you don’t waste time with assumptions. And here’s something that I saw. I saw this Infographic online. I get all my facts from Infographics, it seems, but there’s one interesting thing here. In 2001 annual U.S. revenue from the storage industry is $22 billion.

Scott: Yeah.

Andrew: That’s huge. That’s a huge amount.

Scott: Yeah.

Andrew: You saw that and you said, “I’m going in. I know business. I’m going to go invest in it, and what did you do that kept thinking about it?” What was the mindset you went in with?

Scott: Well, I mean, I assumed that I had landed on just this killer idea.

Andrew: Yep.

Scott: Because you had this big industry, this multi-billion dollar industry, but what was interesting about it is that the biggest player in the space which was public storage at the time only owned 3% market share.

Andrew: Mm-hmm.

Scott: So I said this is an amazing opportunity. We can go out there, and we can build a big national brand by simply acquiring existing facilities and calling them up. But when I jumped into the space, I started to execute my plan here which I learned. What I learned is that the majority of self- storage owners just have one facility, sometimes two.

And the thing is that the facility isn’t just for business, but in many cases it’s their home. It’s where their family works. Right there they’re really invested in this place. And so as I went out there and I tried to negotiate one facility at a time, man, this is going to be a lot harder than I really thought it was going to be. Again, to roll these businesses up and to build this big national brand.

Andrew: I see.

Scott: And I spent so much time, and I spent so much money trying to push through my agenda. But what I learned at the time is that I learned there were other people that were playing in this space, people that had a lot more experience in storage, and they knew this: that the quickest way to grow in that space wasn’t through acquisition. The quickest way to grow was by building your own facilities from the ground up. And if you had two or three or four or five? You could create mass value from people like me that we’re trying to acquire.

And one of the things again, that I learned in that experience was this: sometimes, as an entrepreneur, when you see a problem, it’s so obvious, and it’s going to be so simple to solve. Well, maybe you should take a deep breath and you should step back before you decide to execute. Because there’s probably a really good reason why that problem hasn’t been solved yet. And I think that from my standpoint, if I had done a little bit more homework, and if I aligned myself with people that came from the industry, that maybe knew some of the distinctions that I made once I started to spend money, I would have probably taken a different approach.

Andrew: That makes sense. I do see myself sometimes jumping into an industry and saying, or just assuming that everyone is like me. And so the thing to do is to go in without any preconceptions and say how does this work? Who runs it? What’s possible here?

Scott: Well it is. I’m a big basketball fan, as you can probably see behind me.

Andrew: I do, yeah.

Scott: I’m a huge NBA fan, a huge Lakers fan. Now, I remember having the chance to meet Phil Jackson one time, and he was talking about the importance – whether it was in basketball or business – of approaching everything with what he called a beginners mind. Which is really a Buddhist concept, comes from a word called shoshin. Approach everything as if you’re a beginner. And I’ll tell you, sometimes that’s challenging for entrepreneurs that have been successful in other businesses or other industries, that are trying to set out on something new. Because what happens is they tend to believe that because they’ve been successful again, in one business or one industry, that that success is going to easily translate into another.

Andrew: But what about this, Scott? You did come at it from a good point of view, you said I’m going to roll this up, right? Wayne Huizenga famously rolled up Blockbuster Video, a lot of it was mom and pop stores before he acquired it and then he built it into this billion dollar empire, multi-billion empire. And so that idea is a good one. How do you come into a space with an idea that makes sense, that you’re bringing in from the outside that space so it’s fresh, and at the same time, not impose your assumptions on it?

Scott: Well, I think that you start by building a great team. And you team has to include not only people that look at the problem with a fresh set of eyes, but also people that have been in the industry, that can provide perspective, that might be hard for an outsider just jumping in to latch onto a media link.

Andrew: I see, so if you got into the storage space today or were thinking about it, you might recruit someone who’d already been in it and said, “Look, here’s my idea, help me execute it.” And that person would say, “You know who’s in this space? It’s mom and pop, this is their only job. They sleep virtually in the space.” Gotcha, okay. So that’s how you would get both your outsider’s perspective and an insider’s understanding of what’s going on there.

Scott: Right. The other thing that’s important to do is to pay attention. Really do your homework, particularly if you’re stepping into a new space with regard to who’s already trying to solve this problem in a similar way as you are?

Andrew: Yep.

Scott: Maybe somebody hasn’t, but in the event that they have and, that’s awesome, because you can go and you can learn so much. And you can apply what you learn to this new space, and don’t think that because again, you’ve been successful in another area, that you’re smarter than everyone else. Or your team is smarter than everyone else, and it just doesn’t matter what they’ve done. It absolutely matters, and you absolutely need to apply the lessons that somebody else has learned. You need to ask a lot of questions.

Andrew: All right, and that’s why we have you here, as a person who’s done it, to come back and talk about what you’ve learned so that we can learn from you. Let’s go back to the Big Board and the next big idea for us to cover is to have a clear vision of where you’re going, and this is a man who did it. Let me see if I can do justice to what he did. Look at that photo, I actually Googled his name. Can you see that up on your screen?

Scott: I’m not seeing it yet.

Andrew: All right, it’s going to take a moment for it to come up to you. This is Doug.

Scott: Oh, yeah.

Andrew: Brignole? I’m actually going to Google him, or show the Google image search of him. Look at this guy. This is what he looked like a few years ago. Here he is again, a more recent photo. The guy’s just cut up!

Scott: Yeah, he’s unbelievable. Doug Brignole.

Andrew: Doug Brignole is how you pronounce it. So at 14 years old, he decided to join a gym. He got into bodybuilding around 17 and he did something with tracing paper to help him not just visualize, but to see his vision. What did he do with tracing paper and how did it help him get to this body that we’re looking at right now?

Scott: Well, it’s an unbelievable story because, like you said, as a young kid he got kind of addicted to bodybuilding.

Andrew: Mm-hmm.

Scott: When he was 17, he didn’t win, but he came in second in the Mr. California competition.

Andrew: Yep.

Scott: And it drove him so much, he’s like, I got to set my goals higher. I want something more. And so his new goal was to become Mr. USA. And the way that he went about it is this: In addition to being this amazing body builder, Doug is an incredible artist.

Andrew: Mm-hmm.

Scott: Like if you go to the library, to a bookstore, and you see those books with images that people have drawn of the human body?

Andrew: Mm-hmm.

Scott: That’s also what Doug does. So what he did is, he got one of his buddies, they grabbed a camera and he stood in-front of a wall and he posed, he flexed. And he took a picture, and he blew it up, and then on top of it he put a piece of tracing paper.

Andrew: Mm-hmm.

Scott: And he took that tracing paper, and he drew on top of the image from that photo, exactly what it was he was going to have to look like in order to win the competition.

Andrew: Unreal. Uh-huh?

Scott: It was so amazing. And then what he did is this: is he took that and he put it in a frame. And this is at a time, I mean this is 25, 30 years ago, and this is at a time when there wasn’t protein powder in every store . . .

Andrew: Mm-hmm.

Scott: . . .and an energy bar you could pick up everywhere. And so body builders made all their own food. And he put this picture on this table where he sat down with the food that he made, 5 times a day, and he’d take a bite, and what he’d do is this: he’d take a bite of the food, he’d look at the picture, and he’d say, “That’s what I’m going to look like. I’m going to make that happen.” And he did that for 5 months.

Andrew: Wow.

Scott: And so I remember I asked him, I said, Doug, so is that it? Is the key to success, in getting your big goal, is it like drawing the pictures and getting absolutely clear? Is that all you need to do? And he said no. He said that’s not it. He said, it’s important to have a goal, but what you really need to do is have an effective strategy with regard to how you’re going to be successful, how you’re going to do it. And the way that Doug did it was this: he asked himself these questions. Now that I know my goal, now that I know what it is that I want to achieve, what are all the things that I’m going to need to do in order to achieve it?

And he literally created a plan, all the things he had to do, to build his muscular system the way it needed to look. How he’d have to eat. How he’d have to rest his body. How he’d have to lift. The second thing is: what are all the things that could get in the way? And the third is: what are the things that I’m going to need to do in order to overcome it? And that’s how he created a plan. And then what he did is, every two weeks, he got in front of that same wall and had that same friend take a picture in the same pose.

Andrew: Wow.

Scott: Because it’s so important to be able to measure your results and see how you’re doing. And he compared, he’d blow the picture up, and he’d take that original piece of tracing paper and he’d put it right over the updated photo. And he’d be able to see how he was doing. He might be able to see that his chest was a little bit too big, or his arms were too small, and he would be able to make adjustments. So, the punch-line here is this: that Doug actually did become Mr. USA, he won the competition. But what’s really amazing is that if you go to his house today, he went home that afternoon and he had that same friend have him stand in the same pose and take the same picture, and when he laid the tracing paper on top, the two look absolutely identical.

Andrew: Unreal. So, as entrepreneurs, how do we use this? Does this mean that we take a picture of Richard Branson’s office and have someone on fiver Photoshop our face behind the desk so that we can picture where we’re going to be? Or, what do we do more practically with what he did, because it did really work?

Scott: Well, I think that the first thing is, again, getting clear on what it is that you want. And I think that one of the challenges that entrepreneurs have is, particularly first-time entrepreneurs, is that they may not know exactly what it is that they’re aiming for, right? And that’s a real problem. And again, once you know what it is that you want, when it comes to creating a strategy, you don’t need to create a big, 50 page plan. You don’t need all that weight. All you need to do is answer those three simple questions: What are the things that I’m going to have to do? What’s going to get in the way? How am I going to overcome it? And then checking on your progress, and I suggest doing that once a month. Checking on your progress, ask those same questions, and update when it’s appropriate.

Andrew: All right, let’s go on to the big board of one more time. There it is, the next one is to check in with your significant other. Make sure you’re on the same page, and you tell the story about this couple. She was pregnant. Her father sat him down and said what? Who is this?

Scott: This is Howard Schultz. Meeting Howard Schultz was one of the most amazing moments for me, personally, because of what I learned in the experience. I was a part of an entrepreneur group, and we were hosting an event with Howard. He was going to come and speak to a group of probably 200-300 other entrepreneurs. I remember I was so excited to meet this guy, because I’m such a big Starbucks fan, and an amazing fan of what he’s been able to build. So many other entrepreneurs… My office has been Starbucks locations from time to time.

I remember that when Howard spoke, he did an okay job, and he talked for about an hour. But I think I walked away from his core speech feeling like, man, this is like a press release. I can’t relate as an entrepreneur to so much of what he’s saying. There was some Q & A at the end of the session, and the last person that got up asked, “Howard, I’m a huge fan of yours, and I really came because I wanted to learn.” And he said, “But here’s the thing. When you talked about going through difficult times in your life, you had a billion dollars in your pocket during the time you talked about. As entrepreneurs, most of the people in this room, when they’re going through difficult times, they’re just trying to figure out how to feed their families.” And he said, “So, Howard, I really respect you, but I just don’t think I can relate anymore.”

That was it. He just went and sat down. But the thing is, I think he captured the feeling that everyone else had in that room. In that moment, Howard Schultz made me an even bigger fan. What he did was he stood up from his chair and he walked across the stage, and he said, “You know what? I am exactly like you. I want to tell you a story.”

You see, when Howard was a young guy he started his career as a salesman. One of the accounts that he called on was the original Starbucks store up in Seattle. He because so enamored with the store and what they were doing, he asked for a job. He ended up getting hired as a marketing guy, and he was entrepreneurial, and he had a big idea. His idea was that he wanted to put an espresso machine behind the coffee bar. And they said no. Howard was so bummed out. He was so dejected, that he decided to leave Starbucks. He went on a trip to Europe, found another brand that he wanted to represent, came back home, and started a new company.

Now, about 18 months later he got a call. The call was from his father-in- law. Howard really wasn’t surprised, and his father-in-law said, “Howard, look. I love you, and I totally respect you. This is coming from the bottom of my heart.” He said, “You have been working on this for the last 18 months, and you haven’t been getting a paycheck. Like so many of us entrepreneurs, we’re starting something new. So, here’s the thing. Your wife – my daughter – is the only one paying the bills, and she’s six months pregnant.” So he said, “Respectfully, maybe it’s time to put this on hold. Or maybe it’s time just to let go of this altogether.”

Howard closed up, and he went home and he talked to his wife. He told her about the conversation. He said, “Here’s the keys. I’m ready to give it all up tomorrow.” Then, at that moment she gave Howard what I call the Rocky speech. That speech that Adrian gives Rocky before the big fight. She said, “Look. Howard, this isn’t just your dream. It’s our dream. This isn’t just your vision, it’s our vision. And we’re going to figure out, whether it takes us all night staying up, how we’re going to get through this together.”

What I learned in that experience was this: As an entrepreneur, I’ve always believed that I was the most important person in every company that I started or ran. That’s because I had the fancy titles, and it was my idea, and all that stuff. But what I learned is, the most important person in every company is the person that we come home to, or the people that we come home to. It’s our families. It’s our friends. It’s our significant others. All the people that are impacted financially by what it is that we’re trying to do, or with regard to the amount of time it’s going to take for us to be able to get this venture off the ground.

By the way, these are people that we expect to support us unconditionally, and a lot of the time they’re at the same amount of risk as we are, because they’re invested financially. What I’ve learned as a result of that experience is this. There are three things and I think these are the important things that entrepreneurs need to do, they want to be a successful business. You’ve got to deal with your spouse or your significant other.

The first is this you have to be on the very same page from the very beginning with regard to how much money and how much time you’re willing to risk and your partner is willing to risk. I mean, I’d much rather be on the same page with my partner and risk less than risk more and have them up like worrying and have knots in their stomach all night. It just doesn’t any sense.

The second thing is you need to be on the same page with regard to your partner’s communication strategy. And here’s what I mean. Sometimes these people, by the way, you know, I used to call the most important person the chief executive officer, I call these people the chief venting officers in our company, like the CEOs. They just hear us vent all the time and, again, they’re supposed to be supportive.

You need to find out do they want to be in this business and experience it blow by blow with us? Or is that too much? The emotional ups and downs? Do they want to know less, and maybe it makes sense to update them once a week versus once a day or once an hour.

The last thing I learned is this. My wife, Rachel, taught me this lesson. The way that you spell love with an entrepreneur is T-I-M-E. Well, we have to make time for all the people that sacrificing along with you, you know, and letting you go out there and try to live your dream.

Andrew: There he is.

Scott: There he is.

Andrew: He built a $2.2 billion empire, according to Forbes Magazine all because he got, or not only because, but largely because he got on the same page with the way he did with his wife, with the way you did with your wife. And I found the same thing for myself, whether it’s for work and I needed her to understand and support what I’m doing, or frankly even just exercise or take some time for myself. If I say, Olivia, I need some help getting to this. It’s so much better than arguing with her and trying to go on my own without getting her support and buy-in.

Scott: It’s true and I can only say this. I think that, you know, for years we’ve been taught to be successful as an entrepreneur to be own a great business, the most important thing we need to do is kind of like focus on, you know, building a great team. And we have to learn how to raise capital and be great leads and, you know, we’ve got to sell all these strategies and tactics around building a business, the business stuff.

Personally I think that’s about 15% of what it takes in order to succeed as an entrepreneur. I think the majority 85% is nailing the personal stuff.

Andrew: With other people, yeah.

Scott: Yeah.

Andrew: My wife doesn’t account for 85% of my success, but I see what you mean. With all these other people that I’m working you, you and me, we had an issue where we struggled to connect today because I was connecting to the wrong Skype name and you were sitting waiting. It’s in those friction moments the way that we respond and the way you responded so graciously and the way that we were able to connect. I think that the relationships are formed that end up determining whether we can succeed in our partnership or not.

Scott: Yeah.

Andrew: And I really appreciate the way that you handled that. Speaking of partnerships, I’m using that as a segue to get to the next big point. You say partner with large companies, and you guys did that at Quote.com. Look at what my team got. It came from Ann Marie. You were talking in your book about Quote.com. You were part of the launch team, so she went back to the way back machine, didn’t capture Quote.com so well. It did capture it well enough. I wonder if people can even see on the very bottom here. There you go. See if people can see this. I’m going to zoom. I’m going to keep zooming in until we get it clear.

Be sure to check our partner page for information on joining the Quote.com network.

Scott: Wow.

Andrew: You guys were huge on partnerships. How did you do it back then?

Scott: We were. Well, we were a company that was boot strapping. We were a company that had very little capital, and we were going into a new market. What most people don’t realize we take it for granted today because we see stock quotes all over the Internet. We were one of the first companies to get permission from the exchanges to do stock quotes online.

So we were kind of creating the market to find it and being the leading brand, and but we still, despite all that, didn’t have a lot of money. I remember going to New York and traveling to different places trying to sell stuff to advertisers and using my frequent flyer miles that I accumulated over the years just to make those trips.

Andrew: Really? Uh-huh.

Scott: And here’s the thing. What I learned is this is that if you are stratic [sp] and you’re smart with regard to who you partner with early, you can grow your company farther faster and with far less capital than you ever imagined. And with Quote.com here’s how we did it. We asked ourselves, “What businesses out there have the same type of customer, the same target customer that we do, but they’re doing . . . and what I’ve learned as a result of that experience is this. There are three things and I think these are the important things that entrepreneurs need to do, they want to be a successful business. You’ve got to deal with your spouse or your significant other.

The first is this you have to be on the very same page from the very beginning with regard to how much money and how much time you’re willing to risk and your partner is willing to risk. I mean, I’d much rather be on the same page with my partner and risk less than risk more and have them up like worrying and have knots in their stomach all night. It just doesn’t any sense.

The second thing is you need to be on the same page with regard to your partner’s communication strategy. And here’s what I mean. Sometimes these people, by the way, you know, I used to call the most important person the chief executive officer, I call these people the chief venting officers in our company, like the CEOs. They just hear us vent all the time and, again, they’re supposed to be supportive.

You need to find out do they want to be in this business and experience it blow by blow with us? Or is that too much? The emotional ups and downs? Do they want to know less, and maybe it makes sense to update them once a week versus once a day or once an hour.

The last thing I learned is this. My wife, Rachel, taught me this lesson. The way that you spell love with an entrepreneur is T-I-M-E. Well, we have to make time for all the people that sacrificing along with you, you know, and letting you go out there and try to live your dream.

Andrew: There he is.

Scott: There he is.

Andrew: He built a $2.2 billion empire, according to Forbes Magazine all because he got, or not only because, but largely because he got on the same page with the way he did with his wife, with the way you did with your wife. And I found the same thing for myself, whether it’s for work and I needed her to understand and support what I’m doing, or frankly even just exercise or take some time for myself. If I say, Olivia, I need some help getting to this. It’s so much better than arguing with her and trying to go on my own without getting her support and buy-in.

Scott: It’s true and I can only say this. I think that, you know, for years we’ve been taught to be successful as an entrepreneur to be own a great business, the most important thing we need to do is kind of like focus on, you know, building a great team. And we have to learn how to raise capital and be great leads and, you know, we’ve got to sell all these strategies and tactics around building a business, the business stuff.

Personally I think that’s about 15% of what it takes in order to succeed as an entrepreneur. I think the majority 85% is nailing the personal stuff.

Andrew: With other people, yeah.

Scott: Yeah.

Andrew: My wife doesn’t account for 85% of my success, but I see what you mean. With all these other people that I’m working you, you and me, we had an issue where we struggled to connect today because I was connecting to the wrong Skype name and you were sitting waiting. It’s in those friction moments the way that we respond and the way you responded so graciously and the way that we were able to connect. I think that the relationships are formed that end up determining whether we can succeed in our partnership or not.

Scott: Yeah.

Andrew: And I really appreciate the way that you handled that. Speaking of partnerships, I’m using that as a segue to get to the next big point. You say partner with large companies, and you guys did that at Quote.com. Look at what my team got. It came from Ann Marie. You were talking in your book about Quote.com. You were part of the launch team, so she went back to the way back machine, didn’t capture Quote.com so well. It did capture it well enough. I wonder if people can even see on the very bottom here. There you go. See if people can see this. I’m going to zoom. I’m going to keep zooming in until we get it clear.

Be sure to check our partner page for information on joining the Quote.com network.

Scott: Wow.

Andrew: You guys were huge on partnerships. How did you do it back then?

Scott: We were. Well, we were a company that was boot strapping. We were a company that had very little capital, and we were going into a new market. What most people don’t realize we take it for granted today because we see stock quotes all over the Internet. We were one of the first companies to get permission from the exchanges to do stock quotes online.

So we were kind of creating the market to fine it and being the leading brand, and but we still, despite all that, didn’t have a lot of money. I remember going to New York and traveling to different places trying to sell stuff to advertisers and using my frequent flyer miles that I accumulated over the years just to make those trips.

Andrew: Really? Uh-huh.

Scott: And here’s the thing. What I learned is this is that if you are stratic [sp] and you’re smart with regard to who you partner with early, you can grow your company farther faster and with far less capital than you ever imagined. And with Quote.com here’s how we did it . . .something else?’ And maybe that something else is very closely related to the product that we had to offer.

Andrew: Mm-hmm.

Scott: And so, for us the first thing that came to mind was the new online stock brokerages that were emerging. So, we went to them and we asked a question, because at that time the only thing that these brokerages could display was your portfolio. You know, they couldn’t show you real time stock quotes. So, we went to them, we said, “Hey, what if we did this? What if we helped each other?” And the way we did it is, we provided the stock quote mechanism for you, and we linked it, we built it into your site. So, when user was in your site, they could not only see your portfolio, but they could get a stock quote. Maybe that would not only encourage them to stay longer, but it might get them to trade more with you.

And, what if we were to maybe make that stock feature happen on a code branded page. So, you win and we win, in terms of branding. What if we sold advertising on those pages and we split the revenue?’ So, we went up to all of the major brokerages and you know, virtually overnight we had over 100 partners across the internet. It was everything from the big portals, to the big news sites online, to the big stock brokerages. Within just a matter of about six months, we became not only one of the fastest growing sites on the internet through partnerships-

Andrew: Yup.

Scott: Which, by the way, cost us very little, but also one of the largest revenue generating sites on the internet. What was really, you know, valuable in addition to getting this reach for quickly, and the ability to kind of shortcut our way into generating revenue was, I believe that companies are bought and they’re not sold. If you create the right partnerships up front, and build really strong relationships and continue to add value, you may have be locked yourself in early to a company that might be real ripe to acquire you down the road.

Andrew: I see. I see this article here, where is that? There we go. This is what ended up happening to the company. This is an article from 1999, “Lycos ended up gobbling Quote.com up for $78 million.” You mentioned sales so I started looking through the article and there it is. I think, yeah, 1998 it pumped out sales of $12 million.

Scott: Mm-hmm.

Andrew: Which, at the time was especially huge, because no one was making any sales. Everyone was just after eyeballs.

Scott: Well, you’re right. When we launched in 1995, 96, I believe that we kicked ourselves off as a top 10 (inaudible) sales site on the internet, so it was really remarkable what partnerships did for us. By the way, it wasn’t just that Quote.com were experienced the value of these types of partnerships and what they can do for a company at an early stage. I was in a company called Sports Line USA.

Andrew: Mm-hmm.

Scott: And when Sports Line USA launched, it provided sports information to people that were betting on events.

Andrew: Uh-huh.

Scott: And ESPN around the time, decided to come online, and the founder of the company, Mike Levy, had a great idea. He said, well you know, the other networks are going to want to come online as well. So, what would happen if we took this great content, this great news and information site that kind of has a different purpose now, but we were to go to one of these larger brands and provide the website, they provided the branding, and that’s how CVS Sports Line, which is now CVSsports.com is born. While I was in Zoom.com, the same thing happened with the NBC internet. Again, SmartCharter to Virgin. So, the power of partnerships is just amazing. But, here’s the thing. Don’t ever expect that bringing in a big partner is going to make your business better.

What you need to do is build a really strong, solid foundation for your business before you go out and bring a big partner and get involved with them. The reason is, a big partnership is going to bring in more users and more traffic and more stuff to whatever it is you’re doing, and can expose your flaws faster. So again, make sure that you built a good fundamental business first, and don’t think somebody else because of their brand or their distribution, is going to make you good.

Andrew: Sports Line USA. That’s the name of the company you were part of it?

Scott: Yeah.

Andrew: Wow. Did you own shares in these businesses? Did you own shares of Quote.com at the time of the sale?

Scott: I did.

Andrew: You did.

Scott: Actually, the time of the sale, I did not, I don’t think that I did. I think that I had sold them before.

Andrew: Oh no.

Scott: But, Sports Line I did, and the Zoom and all those others, yes.

Andrew: Did you do well? Did you become independently wealthy before you started your charter company?

Scott: Yes.

Andrew: You did? Wow. Way to go.

Scott: Yes.

Andrew: Okay. Let’s go back to the big board. Don’t let pride hurt your business. Another idea we pulled out of your book, “Launch”, and you talk about this woman, there she is.

Scott: Michelle.

Andrew: Yeah.

Scott: Michelle Patterson, sure.

Andrew: Michelle. What happened with Michelle?

Scott: Well, Michelle is a very successful event planner.

Andrew: Mm-hmm.

Scott: And a couple years ago, she had an opportunity to pick up an event, called California Woman’s Conference, and take it over. The California Woman’s Conference for years and years and years, has been one of the most pristine conferences in the United States. It has been put on by the governor of California’s wife going back all the way back to Governor Deukmejian.

Andrew: Mm-hmm.

Scott: And again, the last governor’s wife decided not to continue it forward, so Michelle took it on. She really stepped in some big shoes. I remember when Michelle got started, she was so excited, and she was so enthusiastic, and she painted this amazing vision for all of us. I remember that I’d check in with Michelle from time to time and say, “How are things going?” And, it’s really funny because I think that when people ask entrepreneurs, “How are things,” it’s like we think that one answer, and that’s like things are great.

Andrew: Yeah.

Scott: I mean, when are you going to hear an entrepreneur tell you that things just are not (inaudible).

Andrew: Driving me crazy. I have people over here for scotch, I ask, “How are things”, it’s crushing it or killing it?

Scott: Yeah.

Andrew: After the third glass, it’s, “Hey you know what, (inaudible) having a little bit of trouble.” Yes, but you’re right. Up front, people always say everything’s going well.

Scott: Well, they do, and I think there’s a couple reasons why. I think one is, as entrepreneurs, part of our job is to be carrying the company flag. Andrew: Yes. We have to be the cheerleaders. You don’t want to go to a game where the cheerleaders say, “Hey, this school sucks.”

Scott: That’s right.

Andrew: Right.

Scott: That’s right. In addition to that, being an entrepreneur can be a really lonely job. I mean-

Andrew: Yup.

Scott: You know, if something isn’t going right, who do you talk to? You don’t necessarily want to bring it home to that chief venting officer, maybe they’ve had enough, and you don’t necessarily want to take it to their friends. They’re there for something else (inaudible) as some of your close friends, and we certainly can’t take everything to employees. So, you kind of keep it all inside, even though you know that the story you’re telling others isn’t necessarily congruent with what’s happening in the business.

Andrew: Mm-hmm.

Scott: And that was the case with Michelle. I remember as we got closer to the event, and I’d ask her, how are things, and she’d say, great, she called me about 17 days, 18 days before the conference was ready to start, and she said, “Scott, I got a big problem.” I said, “What?” She said, “Let me tell you what’s really going on with this conference and this business.” She said, “The investors that were supposed to put in money didn’t come through.” She said, “Many of the sponsors or advertisers ended up not coming through or following up with their commitment,” and she said, “We’re effectively broke.” She said, “In fact, I’m a million and a half dollars in the whole, and I’ve got 17 days to figure it out, or they’re not going to open the doors.”

Andrew: Wow.

Scott: And so, I remember I got up from my desk and I drove over to Michelle’s house, and we started to talk about this problem and how we were going to solve it. That night, she told me that she was about to go to bed, and she talked to her husband. She said, “You know, I feel so terrible, I feel so guilty.” She said, “I feel like I’m going to bankrupt this entire family, and you’ve all been so supportive.” And she said, “And I think because I’ve just been too prideful to let others know what was going on and get their help.”

And he said this, “You know, Michelle,” he said, and this is just like Howard Schultz’s wife, you know? He said, “Michelle, here’s the thing. You know a lot of really successful people, and the odds are, many of them have been in the same exact position. You should just reach out to some of them and let them know what’s going on before you decide to give up.” And so, the next morning, the first call that she made was to the person that ran the conference center where they were going to hold the California’s Woman’s Conference. Michelle went over and saw them, and she started to open up to him about the problems. He stopped and he said, “Michelle, I just have one question for you. What’s your favorite flavor ice cream?” And she said, “Strawberry”.

With that, they went out and they grabbed strawberry ice cream, and he said, “You got a partner in this.” He said, “We’ve all been here before. Let me help you to figure it out.” She went home, after that meeting she felt this renewed sense of confidence, and with it she developed a list of the 50 people that she believed she knew in her network that could help.

What was interesting is that when she called them they didn’t answer the phone, listen to the story, and say things like, “How could you let that happen?” Or, “Why would you ever…?” Instead, what they said were things like, “Why didn’t you call me sooner?” Or, “I’ve been in that exact same situation.” Or, “Boy, let me tell you something, because I’ve been in a lot worse.”

As a result, these people started to work together to help Michelle. And guess what? She went from $1,500,000 to $150,000 in 15 days, and she was successfully able to open up and execute the Women’s Conference and have a great show. This year, it was even bigger in Long Beach. Again, I think that as entrepreneurs what’s really important for us to do when we’re having trouble is to go to people, and specifically look for people who have built successful businesses – the kind that we aspire to have or to build like – and ask them for assistance. Ask them for guidance, because the odds are that they’ve been there themselves, and they’re going to be more than willing to share and help you solve the problem.

Andrew: Yeah, but we have to be comfortable letting down the guard and not constantly saying that everything’s going well, that we’re crushing it. And she did do a fantastic job with the event.

Scott: You know, one of the real values of Entrepreneurs Groups – I always recommend that people do join Entrepreneurs Groups and Masterminds – is that if you can get into a group where people agree to keep things within that group confidential, and to be open to share with one another, it can be an incredibly valuable tool, because it will give you the confidence to really let others know what’s happening. Which, by the way, is going to be great for you, and if nothing else for your health, because you’re able to let that out. And also, you’re going to get other people again that are helping to be part of the solution for you, and that will give you confidence.

Andrew: Cool. By the way, you’re an incredible storyteller. Sometimes, actually… I don’t know if you noticed it, but there are times when it took me a little while to adjust the screen. It’s because I’m lost in the story. Even though I’ve read it, I’ve got it here in my notes, I’m clearly teeing off a specific story, I see you tell the story and it’s just amazing.

Scott: You know, when I was in college I ended up leaving college a little bit early. My first boss was bestselling author and speaker Tony Robbins. This was over 25 years ago. Gosh, almost 25 years ago. I remember learning from Tony. But I think what was even more valuable, in terms of storytelling, was just before I went on the road working for Tony, I had a chance to work for a gentleman named Jim Roan. He was an amazing author and speaker, and so inspiring. Jim used to always say, “Make your life a story.” If you can make your life a story, whether you’re a salesperson or an entrepreneur, if you can learn how to tell stories it will help you to connect with other people.

The other thing that he used to always say is, “Open up and be real.” And just let people know where you’re coming from. If you do that, they’ll be more inclined to help and connect with you. As entrepreneurs, again, I think it’s so important that we share our stories, but it’s okay to be real. Be you. And by the way, be you, because here’s the thing: If you don’t in a social media world, people will figure out that you’re not being you.

Andrew: Yeah.

Scott: Right? And then you lose all credibility.

Andrew: And then someone else will point you out. You can pretend all day long that you’ve got great expensive cars, a big house, company’s doing well, but someone’s going to come to your house at some point and post a photo on Instagram.

Scott: That’s right.

Andrew: If only of themselves. A selfie. Then your crappy house will come out, or the crappy car, or whatever it is that you’re trying to hide will eventually come out, so you might as well just be yourself and do it. But the hard part for us here at Mixergy is always getting guests – getting entrepreneurs, especially – to tell stories, because they always think no one’s going to care. No one wants to hear it. All they want is to get to the facts. And I’m listening to you, and I’m watching you, and instead of just jumping into the facts, which often is just one-sentence facts.

I’ve got it up here on the big board – you take the time to say, “Here, let me set it up. Let me tell you the story of Michelle. Let me tell you the story of what happened to me when I was talking to customers. Let me tell you the story of Howard Schultz.” It does make it more interesting. It adds a lot more credibility to the message, and it’s more memorable. I know people are going to remember Howard Schultz having a conversation with his father-in-law long after this session is over.

All right. Back onto the big board. Now we’re going to talk about someone whose name you’re intentionally not going to tell us. The key idea here is to focus on one thing at a time.

Scott: Yes.

Andrew: And you worked with an entrepreneur. I don’t even think you give the person’s name in your book, but he raised $2,000,000, and he was a friend of yours.

Scott: Yes.

Andrew: But then what happened with him?

Scott: Oh, wow. He, first of all, had a great idea. When I ran into him we had been disconnected for a while. He was so excited to share. And basically he had done was identified the market, and he had this really . . . He had identified this market. He had like this one problem that he wanted to solve in a simple, elegant solution and on an idea he went out and he raised $2 million for a consumer Internet company.

And this is after 2008. This is at a time where it was really difficult to raise that kind of money, especially on an idea. So we’re high fiving him. We’re so excited for this guy. And about 18 months later I ran into him again. And I said to him, I said, “You’ve got to tell me. How are things going?” And I couldn’t believe it. He said, “You know, we’re about to shut down.” And I said, “How in the heck is that possible, like how could that happen?”

And what he told me is this. He said, “You know, when we got started,” he said, “We identified the industry and one problem in the industry and we had a really simple solution, but as soon as we got the money and it was probably too much money, something crazy happened. Every day somebody came into the office with another great idea, right? Another product or another feature, another service or something that we should add. And I called this the “shiny ball syndrome,” like you see it over here, here, and here.

And so what you do is you keep spending, and you keep building and building and building. And he said, “Before you knew it, a year later, what we had done is we had built this big, bloated product. We tried to sell everybody in our target problems, and he said, “We decided to launch. And when we did we learned a big lesson, and the lesson is this. When people started to use the product, 95% of our users only used 5% of what we built.

Andrew: Mm-hmm.

Scott: And so if you flip that around, what that means is 95% of our time and 95% of our money was the fact that we wasted it. And the last thing that I had tried to reinforce with him as he was getting this business started, which he didn’t follow, was this. When you’re launching it’s so important to take your idea and build the simplest version of what that is. You know what? Many people call it the minimum viable product, not the hardest thing the simplest thing. And to get that into people’s hands and get it into their hands quickly, because again once they start to play with it, once they start to use it, they might make additional distinctions that you could then use to improve it.

You might find that what you are building or built is something that this audience doesn’t want at all, and you have to go back to the drawing board.

And so, again, what I recommend is I recommend starting out with one simple thing and getting it out, getting feedback, taking that feedback, iterating, and then relaunching again. And it’s so important, again. Somebody can tell you everything that you want to hear.

They can tell you that you’re on the right track. They can eat your sandwich, you want to start a sandwich shop. They can play with your website if you’re going to, you know, start the next Virgin or Google of whatever it is. But until they get it in their hands, until they really use it and digest it, they really can’t tell you how exactly they feel.

And so what you might find, you might find that your buyers, your customers, again, are liars, not because they want to be, not because they want to mislead you, but instead because they just didn’t know until they use it. So, again, it’s important to launch with the simplest thing. Don’t spend a lot of money. I always say, if you’re 85% of the way there, then ship it, get it out the door because the additional time and the additional effort and money will be worth that additional 15% while you’re out there getting feedback from your customers.

Andrew: All right. Let’s go on to the final point here which is . . . I’m going to call myself out. I think it’s I’ve got here to create a buyer’s blueprint, but I think it’s a buyer blueprint, right?

Scott: Create a buyer blueprint, yeah.

Andrew: Right. I shouldn’t have pluralized it, but there it is right now on the board. Create a buyer blueprint. This is something that you learned when you worked for this man. There’s Tony Robbin’s photo from his Twitter account.

Scott: Yes.

Andrew: And one of the things that he taught you is the big mistake that sales people make. Do you remember what I’m talking about?

Scott: I do, like it was yesterday.

Andrew: Right here on the big book.

Scott: Yeah, the biggest challenge that he used to say that sales people make is this. They try and sell what’s most important to them versus what’s most important to their target. And that’s either because they are so passionate about this idea that they have, or they’re so passionate as entrepreneurs to drive something home, or it could just be because their boss told them that’s what they have to sell.

Andrew: Yep.

Scott: And so what happens is they fail to ask the two most important questions that we all need to practice each and every day, and the first is this. You have to ask, you know, what is most important to you about “blank” about whatever it is. What’s most important to you about this product? What’s most important to you about this website? What’s most important to you about the sandwiches you buy? Whatever it is.

Andrew: Mm-hmm.

Scott: What’s going to happen is, your potential buyer is going to give you a list. They’re going to give you your answers. But, the second question is the one that most people forget. They just fail to ask, and it’s probably the most important. It’s, what has to happen, or how do you know that you’re getting what you want?

Andrew: Okay.

Scott: So, as an example, let’s say I have a technology product like a content website kind of thing I’m building. I might ask a potential customer, “What’s most important to you about this?” And, what they tell you is that it’s easy to use. Now, easy to use means a lot of different things to a lot of different people. So, the second question is, “What has to happen”, or “How do you know it’s easy to use?” And then what they do is they give you that blueprint. They’ll say things like, “It has to be mobile. It has to be this, it has to be that.” And so by asking that second question, you can really find out what buyers are thinking and create a great map for yourself.

Andrew: I see. What’s important to you about X, how do you know you’re getting it.

Scott: Yes.

Andrew: Those are two questions that you want us to ask all customers so that we understand the customer before we start to sell the customer.

Scott: That’s right.

Andrew: All right. The book is, and people might have heard me play with it in the background, there it is, “Launch”. Scott Duffy, thank you so much for teaching some of the ideas from the book. To get more, then you just go to hear it, directly to Scottduffy.com, and there’s a book on the site. Thank you so much for teaching.

Scott: Thank you so much. It’s great to be here.

Andrew: Cool. Oh, you know, one more thing before we end.

Scott: Yeah.

Andrew: Do you have a book recommendation for how to tell stories the way you tell stories? You’re fantastic. I love how your book is full of examples, it’s not just full of theories, it’s full of examples from real world, and just listening to you is fantastic.

Scott: Now, I’ll give you a big example. So writing my book was one of the most painful things I’ve ever done in my life.

Andrew: Okay.

Scott: We brought in-

Andrew: It feels like you’re just writing. It feels like you’re riffing, like you’re just riffing here with me.

Scott: Well, here was the challenge. What the challenge was, you have to learn how to tell the story, but the story isn’t about you.

Andrew: Mm-hmm.

Scott: The story is about what you want your audience to be able to take away from the story.

Andrew: Okay.

Scott: I think that one of the biggest challenges that people have when they’re storytelling is, they just focus on telling the story of Howard Schultz without, here’s the things that you really need to learn that you could apply from that story.

Andrew: I see.

Scott: And, I think if we just focus on that, it really helps and I think that the biggest gift for me to writing the book, the biggest thing I wanted was really how to do that.

Andrew: Tell the story and make sure that at the end of the Howard Schultz story, people understand they should talk to their significant other because otherwise you have a conflict. But, if you do it, then you have an ally. It’s (inaudible)

Scott: Right. So, when I started outlining the book and say, ‘I got this great story about Howard Schultz, I’m going to tell the story.’ But, when I wrote the book, the book that you have in your hand, the difference and distinction that made it come together was, I said, ‘Here’s a lesson I want to teach about how important family is. Is there a story apart in my life that I can connect to that material?’ And, that’s really the way to do it.

Andrew: All right. Good advice. Thank you so much for teaching this. The website is Scottduffy.com. The book is, “Launch”. Thank you all for being a part of it. Bye guys.

Master Class Toolbox

Transcript

Andrew: This session is about how to transform any business from a cash- eating monster to a money-making machine. It’s led by Mike Michalowicz, a founder of two multi-million dollar companies which he built and sold, and he transitioned to writing books and teaching.His latest book is called “Profit First,” and that’s where I got the title for the session. The subtitle from the book is “A simple system to transform any business from a cash-eating monster to a money-making machine.”My team and I . . . by the way, I should say my name is Andrew Warner. I’m the founder of Mixergy, where proven founders teach. And the team here at Mixergy pulled out of the book a collection of tactics that we think you’ll be able to apply quickly and get results from. And hopefully if you like those and you find them helpful, you can go and get the book “Profit First.”Mike, welcome back.Mike: Andrew, it’s just great to be here again. I love that you do this with me. So thanks for inviting me back.Andrew: Me, too. Thanks for being here even though apparently the word “transform” still is too tough for me.

Mike: [??]

Andrew: But I’m working on becoming more pro.

Hey, you did something really cool. You sold your company, and then you brought . . . you bring this up, not this specific one. But this is the car you got. What car is that?

So I . . . after I sold my second company, I was like, “Oh, okay. Now it’s time to play out all my little college fantasies.”

Andrew: Mm-hmm.

Mike: And one of them was to get that car. So I got that exact car you’re looking at, with a darker blue and a more current year. And thought that it was important for me to show off my wealth and my success through trophies.

That was just one. I got an LR3 Land Rover. I got the 7-series BMW. I moved into an expensive town. I joined the club, all these things to show my success to the world.

Andrew: Yeah.

Mike: And I have to summarize by saying I became a dick, a big, big dick.

Andrew: You mean, you were a jerk to people.

Mike: A jerk, yeah, to people.

Andrew: Okay. What kind of things did you say to them? “Here’s $5. Wipe my butt”?

Mike: Yeah, right, well, that was one of them. No, I didn’t say things. I felt things.

Andrew: Oh, okay.

Mike: So if you and I ran into each other in the street, Andrew, and you were telling me about your business, in my head I’d be like, “Ugh, here we go, another pathetic soul.”

Andrew: Ah.

Mike: “They don’t know how to be successful. I’m the genius in the room. Just listen to me. And if you don’t believe it, look at all the crap I’m accumulating.”

Andrew: Oh, I see. I get it. Yeah, and you feel like you’ve earned it, because, you know, you really put in the hard work. You want to treat yourself.

What does a Viper cost?

Mike: New, at the time, I think $85 or 90,000. The LR3 was $100,000. BMW, $100,000.

Yeah, it was . . . you know what it was? It was just . . . I thought that wealth was the stuff we showed, and not something inside. And when I finally sold a company to have it, I felt like it was time to show off my trophies.

I’ve subsequently come to realize that well-dressed poverty is still poverty. Like, when we still have an impoverished mind, it doesn’t matter what we look like. I still didn’t have the right mentality. I thought I did. I didn’t.

Andrew: So what happened to your bank account as a result of all these cars and spending?

Mike: Yeah, so that’s not the only way I spent. After selling my second company, I was like, “Oh my God, I know the formula to grow companies. I’m going to become an angel investor. I’m going to invest in all these companies.”

Quite frankly, I became the angel of death. Every time I put money into a company, I was destroying it, it seems. And I started or participated in the launch of about 10 companies over about 10 months, and every single one . . . except for one. But every single one except for this one was done, was a failed venture, within six months to a year.

And I remember I was spending money so quickly, these businesses were out of business and I just kept on throwing money at it. And it took me a mere two years to lose everything. I mean, literally every penny I had made.

Andrew: Wow.

Mike: So people go, “Oh, Mike, you know how to grow businesses.” I’m like, “Yeah, well, that took me 15 years. I know how to lose money even better than that. It only took me two.”

Andrew: You know what? And I think a lot of people in the audience might say, “You know what? I’m not going to spend money on a Dodge Viper. I’m not going to buy myself a BMW and all these other cars.”

Mike: Right.

Andrew: But where we do often run into trouble is where we make seemingly good business decisions, like investing in other companies for you. Or for others, it’s buying an office, or investing in certain kinds of ads, et cetera. Seemingly reasonable decisions that end up causing trouble because we don’t judge them properly.

And we’re going to talk about, in this session, how to judge them properly.

Mike: Yeah.

Andrew: After you did all this, after you did so much of what you’re going to talk to us, did you end up okay, or are you still now with no money in the bank and just a memory of the car?

Mike: Yeah, well, memory of the car, but money in the bank, right? So I am in a much better position than I’ve been in my entire life. I have built a profit habit.

So I used to believe profit was an event. I called it, you know, pump and dump. That’s the popular term. I’d build a company fast, sell it. That’s how you make your money.

And that’s what’s kind of perpetuated in the media. You build a company. It doesn’t matter if it makes money. You build Twitter. It can fail. Until you sell it, and that’s where you make your money.

Andrew: Right.

Mike: So that’s what I was doing.

Today, I have a whole different vantage point, I believe. A much healthier understanding of what profit is. And it’s not these events. It’s a habit. It’s a daily habit.

Andrew: Okay. And we’re going to talk about how you did that. And here are some of the ideas from the book.

The first is “get your credit cards reissued.” What do you mean reissued, and why is that such an important thing to do?

Mike: Oh my God. So . . . well, as I was running out of money in my life, but also in my business, I believed in the old adage “it takes money to make money.” So I just took other people’s money. Credit cards. And was spending that, and hoping I could turn.

And we’ve got to realize that borrowing money from a credit card company is no different than borrowing from a friend. It’s other people’s money. It’s very easy to spend.

One habit I think every business needs to have, everyone needs to have, is get rid of the credit cards and go to debit cards. Because when you use a debit card, every time there’s a transaction, it immediately comes out of your business bank account, or your personal bank account. You feel the pain immediately. And now it’s no longer other people’s money. It’s your money.

And just that little, subtle change is a huge behavioral change. Now my spending . . . I’m a lot more cautious. “Whoa, whoa, wait, wait. I’m not buying that software. I don’t want to spend my money.” But when it was credit card? “Ring, ring!” So changed . . .

Andrew: You know, one of the cool parts about having it reissued is . . .

Mike: Yeah.

Andrew: So we found this photo of you . . . this is really your chest here, right?

Mike: So . . .

Andrew: Right?

Mike: Yeah, that really is my chest hair.

Andrew: Not your chest hair. This is your chest here, is what I meant to say.

Mike: Oh, chest here. And my chest hair.

Andrew: And your chest hair. And you’re a fit guy. And one of the reasons you’re a fit guy is you go to the gym.

And of course when we go to the gym, we have to give them a credit card — or we can do a debit card — and they charge that card month after month after month.

Mike: Right.

Andrew: By having that card reissued, you stop that ongoing monthly expense. When you got the new card, you had to decide, “Do I want to give this to the gym or not?” And what did you decide?

Mike: Yeah. So that was my exact experience. I joined the gym. I had a gym membership.

Andrew: Mm-hmm.

Mike: And what happens is these recurring charges, I lost sense of this. I stopped going to the gym, because I just stopped going, but I forgot that there’s ongoing costs were going on.

When I changed cards, when I canceled my credit card and put on my debit card, all of a sudden my phone starts ringing from all these vendors I haven’t heard from in years. “Hey, we can’t process your payment. Are you still going to be part of the gym?”

I’m like, “I am part of the gym? I totally forgot.”

Andrew: Yeah.

Mike: But this is true for . . . a CRM I forgot I was using, and all this other stuff.

So what happens . . . there’s these recurring we invoke in our business that at the time made sense, but sometimes we forget we even have them. By ditching the credit cards, it’s a full reset, and a lot of these things you aren’t aware you’re doing all of a sudden comes right in front of your face, and you are presented with a decision. Is this something that’s still appropriate for my business, or is this a gym membership that I’m not using, and I’m working out in my house now? I should cancel it.

Andrew: I see. Yeah. And there’s a drastic decision. You make that one decision one time, you get a new card, and suddenly all those recurring payments stop, and you get to reanalyze whether you want them or not.

Mike: Exactly.

Andrew: Fair enough. All right. Onto the big board. And the next big idea we want to talk about is to perform an instant assessment so you can figure out the numbers that will make your business profitable.

And sometimes this is where I think we sometimes delude ourselves. You were at a period in your life where you were near bankruptcy, and you said, “You know what? I’m going to look at all my expenses.” And one of the expenses was office expense.

What happened . . . do you remember what your office expense was, and what you did to it?

Mike: Yeah. So I ran through this instant assessment. I have it in “Profit First.” I think we were talking about showing that a little later on.

Andrew: Yeah.

Mike: And, all right, so basically, what this instant assessment does is I analyzed all these companies, from small start-ups — a couple, you know, thousand dollars, brand-new start-ups — to $50 million companies, and everyone in between, and discovered what healthy companies, the healthiest of companies, run at, and what kind of profits they make, what the owners get paid, what the tax liabilities are, blah, blah, blah.

And what I learned about was there expenses. And some of the healthiest companies, of their gross revenue . . . say a company makes — round numbers — a million dollars a year. They have about a 30% operating cost. So that means they get a million dollars in sales, but only $300,000 is sent to pay rent, pay employees, etc. Thirty percent.

Well, I ran this number against my business, and found that I had 80% cost. And that was not even considering my pay. So a million dollar business, I had $800,000 going out to rent and employees and so forth. And then with the remainder, I was trying to pay my taxes, and then pay myself, and I had no profit.

Well, what I discovered was when I ran this, that a lot of my expenses which I thought were pretty reasonable — I only had $1000 a month in rent — that really, my business now is shaking and screaming at me, saying, “You can’t afford that stuff. Mike, your business isn’t at the size to afford this.”

So what I did specifically with my office, when I thought $1000 was fair, but ran this assessment and said, “No, I can’t afford the costs I’m incurring.” I cut my cost down to zero for office space.

Actually, the story I have in the book. I moved into a factory that was owned by a friend. He manufactures cookies. Gave me free office space. Just as good as any other office space. Plus free cookies. So that picture you have is kind of like mid-cookie. It gets worse after.

Andrew: You mean the one where we saw your chest hair and chest hair.

Mike: Yeah. My chest hair and the beginning gut there. You see the gut rolling down the sides there.

Andrew: Looks good.

Mike: Yeah.

Andrew: So here’s what I’m thinking.

Mike: Yeah.

Andrew: You used to have $14,000 a month in office expense. You said, “Great. I’m going to cut that down to $1000.”

Mike: Right.

Andrew: That seemed reasonable. And only after you did this in-depth analysis did you realize — tell me if I’m wrong — only after then did you realize, “That is not enough. I have to take it down to zero. I might be feeling proud of myself for going from 14 to 1000 a month, but that’s not enough.” Right?

Mike: Exactly it. And the key word you say, Andrew, is reasonable. You know, reasonable isn’t good enough. If you want to grow a healthy business, you have to be unreasonable. You have to find ways to get the same things done with way less cost instead of . . .

Andrew: So the part that I didn’t understand in the conversation right now . . . and I do have the instant assessment, I thought we could go over in a moment. But can you just help me understand what you were saying earlier about gross profits versus net profits, and what . . . how . . . why wasn’t the $1000 a month enough? How did you figure that out, that cutting to $1000 wasn’t enough?

Mike: Yeah. So the assessment of a business that wants to be healthy is real simple. You take your revenue — what your total revenue is — and you can run it . . . there’s a free download that you’re offering with this chart. You run your revenue number against these percentages.

And the chart will tell you very quickly, if you have a million dollar business, for example, that you can run an operating expense upwards of 30, maybe 40%. I can’t remember the exact number off the top of my head.

But because the other dollars have to be allocated towards stuff. Towards tax responsibility, pay, perhaps buying capital equipment, and so forth.

So the problem that most businesses have is that we have a million dollar business, we think that we have a million dollars for expenses. We can just run our business off a million dollars. And that’s not true. Because if you run your business to cover expenses, there’ll never be profit left over.

So this instant assessment tells you what you really have available for expenses. It’s kind of like a bucket of cold water in your face. It’s a wake-up call saying, “You can’t afford what you’re doing right now. You have to find a better, more innovative way.”

Andrew: So this was the PDF you were talking about earlier.

Mike: Yeah.

Andrew: With the Profit First Instant Assessment. We can give this out to the audience. Which, this is the step-by-step instructions. Here is I think what you were talking about, Figure 1 and Figure 2. Right?

Mike: Yup. That’s the charts. Yeah.

Andrew: Okay. So if we’re looking at here at a million dollar business, that’s Column C, maybe.

Mike: Yeah. So if you’re running a business . . . and those are the exact numbers. This is what I studied with healthy businesses. A healthy $1 million business . . . and I know this is a generalization, and most people say, “My business is unique.” But you know what? It really isn’t that unique.

Of all these businesses in all different fields, I discovered that a million dollar business will be taking a profit of about 15%. So at the end of the year, that company’s taking $150,000 in profit distribution. Now, that’s above and beyond the owners being paid $200,000.

And then taxes. You know, we shouldn’t be paying taxes ourselves. The business was designed to serve us. So $150,000 is reserved for corporate tax responsibilities and personal tax responsibilities of the owner. What that leaves, at the end of the day, is 50%. And that 50% is used to run the rest of your operations. It’s payroll, everything.

What this forces you to do as a business is you have to be efficient. And if you don’t pre-allocate your money toward profit and paying yourself first, what the default nature of all entrepreneurs is that 100% of top line goes to 100% of expenses. And these companies now survive check by check, barely getting by, because the money that comes in instantly flows out.

This instant assessment tells you where to stop it, where to allocate your money, before you pay a single bill.

Andrew: All right. So let me do it again with a different set of numbers. I’m just going to wipe that out. Here’s what . . . let’s suppose someone is in this column right here. Column 1. They’re making roughly a quarter million a year.

For them, you’re saying all of their expenses should amount to 30% of revenue. All of those expenses.

Mike: Exactly.

Andrew: And anticipate taxes of roughly 15%.

Mike: Right.

Andrew: Anticipate taking home . . .

Mike: 50%.

Andrew: . . . half the revenue as profits.

Mike: Exactly. For your own pay. Yeah. And the reason . . .

Andrew: Uh-huh . . .

Mike: The reason . . . and, yeah, 5% profit.

Andrew: Five percent profit. That’s what your business should be doing, but it’s not that 100% of your expenses can towards running the business. You just have to think in your mind 30% of the money coming in is going to expenses. If I get to 50% I’ve gone too far.

Mike: Exactly. The reason this happens is that’s a smaller company. You’re basically a free lancer at this mode. If you have 250,000 or less, chances are you are the only employee or maybe a part-timer. As the business grows, you have to put the infrastructure in and the people. So the things start shifting. So that’s the ideal numbers.

The other tip I have for people is this is ideal numbers, but if your business right now is running check by check, if you implement those numbers immediately it’s like taking a frozen mug and putting it into a hot oven. It’s going to burst. So what you need to do is slowly move towards those numbers. I suggest starting out at a lower percentage point knowing that’s what you’re targeting. But every quarter, every ninety days, move it up, move it up, get closer to those targeted perfect percentages.

Andrew: All right. So on to the big board again. We’re going to the next idea here which is to determine your profit allocation percentage and tell your accountant so you can get on a path to profit immediately. And you talk about the founders and owners of this company [??] and they did that, right?

Mike: Yeah, these guys are amazing. They found out about me from my first book, “Toilet Paper Entrepreneur” and I’ve got a good relationship. The guy in the center and to the far right that’s George and Jose. They built this company, and they started doing Profit-First. There’s target allocation percentages with just that chart which we went over just now, but I have an alternative life. You don’t want to go with my chart because it’s, you know, “too generic.”

You can also go on to Yahoo Finance or Google Finance and look at public companies that are playing in your sector. So if you provide coaching services, look at training companies that are public. If you’re a law firm, look at a public law service firm. And you’ll find out the healthiest of companies, what their numbers are and you can target those. Not surprisingly those target allocation percentages for profit, pay, and so forth, you’ll find to be very similar to the chart that we just showed you.

That’s an alternative way of finding the specific target allocation percentages for your market.

Andrew: Got it. And when they did it, they went to 2%.

Mike: Right. So when Jose and George started, they realized in their market they could run a 15% bottom line and a 25% owners pay margin, but they said, you know what? We’re first going to start with a 2% pay because the first step of this Profit-First mentality is to get into the habit of taking a profit first. What you’re learning here is basically the pay yourself first process, something that we’re supposed to be doing in our personal lives. But you need to apply it to the entrepreneurial side, to your business life.

And if you go full bore, you may not be prepared for it. You may have too many expenses going on. You may not be able to cut back fast enough, and now you’re going to start borrowing. That’s stealing from yourself. It’s there for profit. You’re going to take it back, and that defeats the system. The key is start small, build the profit habit, and slowly build it over time to bigger and bigger margin.

Andrew: So it was take 2% of the business out at first as profit.

Mike: Yeah, that’s what I started. The last time I spoke to them a few months ago they’re about 12%. But those two guys went on some wild vacations and had some amazing dreams come true for themselves in their personal lives because they built this profit habit.

Andrew: But it’s 2% profit for the business, or 2% owners pay?

Mike: Those are different, profit for the business. You didn’t realize as owner of a business you actually serve two functions. You’re an equity owner. You’re a stockholder, just like you’d own stocks in a public company, and you get dividends. That’s your profit.

The second thing is you’re also an employee as an owner. That’s owners pay. You’re paid to work inside the business.

Andrew: Okay. So for them it was profit for the business 2%. They still took money off themselves.

Mike: Oh yeah.

Andrew: The business kept that profit and allowed it to grow in the future, and then they kept upping and upping that percentage.

Mike: Exactly. So they gave themselves healthily a 2% profit. They did quarterly distributions, again, just like a public company. When Bloomberg is announcing a 15 cents per share distribution, George and Jose were taking about $2,000 a share distribution for themselves and celebrate with it. We all should be doing that.

Andrew: All right. On to the next idea here from the book, and that is, to brainstorm ways to become more efficient. And you talk about UPS. I found this article about them. This is from their website. Let me zoom in. It says, “When in doubt, UPS avoids left turns,” and they explain how and why they want to do that. This is from an internal document, I think.

Mike: Yeah, yeah, I include that in the book, and this is an amazing story of the power of a public company doing this, but any company can do this. UPS, just like any other business, is trying to maximize profitability. The wins for profitability happen in the minutia, the small elements. And what they realize is they just started measuring things that were going on and that their drivers a lot of time were idle. They drive up to a traffic light and sit there. They’re trying to cross an intersection, they’re sitting there. They realize that left turns can take up to ten times more time than taking right turns. You can turn right on red, you don’t have to cross traffic when you take a right.

Andrew: Mm-hmm.

Mike: So once they realize this they say, ‘What if we set up the navigation for each driver for each day so that their route is mostly or almost exclusively right turns?’ And sure enough, they were able to make a big efficiency gain. Now the same driver can do five or six more stops. They can increase their productivity by 10 or 15%, by not taking left turns. Now they do all these efficiency, little steps forward in different areas, and by doing a lot of small improvements in efficiency they get one major efficiency improvement overall in profit increases.

Andrew: Do you have an example of how brainstorming like this helped a smaller company, a smaller entrepreneur come up with an idea that they wouldn’t have discovered otherwise but saved then money on an on-going basis?

Mike: Oh, yeah, yeah. I’ll talk about one company that I’m an investor in. It’s a manufacturer of outdoor products. I own 25% of the company. I’m just going to reserve saying their name. What they do is, we make some certain products. And what we realize is that making a certain product requires rivets. That there’s ten different rivets required. And what we did is we sat down with the entire team and this is critical. You as an owner may not know it, so we sat down with our entire team and we’re a small shop.

Our entire team literally is five people. The guy on the floor to the owner, and everyone in between, we got together and said, “To make this product as well as we can takes ten rivets. But we also realize is we can do it with two rivets less, we’re going to save serious money for each unit, about 50 cents a unit. But we make thousands and thousands of units, becomes real money. How do we cut this thing down by at least two rivets?” The team brainstormed, came up with a new way to fold in the material and it didn’t require two less rivets, it required four less rivets now and was sturdier.

Andrew: Wow.

Mike: So what you have to do is just put out the questions of how do you get the same or better results with less material. My favorite question to ask is this: Whatever you do today in your business no matter what it is, how do you do double the productivity, double the results with half the cost? I know it sounds like an absurd question, but if you ask it, you may nail it, or you may find somewhere in between, but it will move you forward.

Andrew: That makes sense. And we’re so resistant to doing that because it feels, if I were in the business that you just described, I would say, “Of course we have to have rivets. We want as many as possible so that we could have a really quality product.” But as you say, sometimes folding it a different way requires fewer rivets, less time and just as good if not a better product.

Mike: Less time. Yeah, it was a snowball effect too. It wasn’t just less material, right. It was less time too.

Andrew: All right. Onto the big board. Next big idea is create a stocking account so big purchases don’t crush your business. You talk about JB in your book.

Mike: Oh yeah.

Andrew: JB who has a roof deck company. What’s the name of the roof deck company?

Mike: it’s called Roof Deck Solutions.

Andrew: Roof Deck Solutions. I think this is them, isn’t it? What did he do? Is this them?

Mike: That’s them. Yep, that’s them, that’s them. They make cool roof decks in Manhattan and different metropolitan areas. What they do is they go to those abandoned roofs on top of a building and they renovate it over. JB, his business is a multi-million dollar business, but one of the challenges going on is he has to buy a lot of materials.

So here’s what you need to do. If you have a business that’s material intensive, as revenue comes in, before you allocate to a profit and other stuff, the direct material costs you must reserve and put into a stocking account. Because ultimately you’re going to have to replenish those goods. He has to get the woods, the materials and so forth. So instead of just having one account, you have to have multiple accounts for different purposes with your bank. So I would set up a profit account, a owners pay account, and his case, I would set up a stocking account because he has to get more materials.

Andrew: You mean, literally a different bank account where we wire the money in on a regular basis. In his case, I think it was $250 that he kept doing every month.

Mike: Yup.

Andrew: And then when a big purchase comes in, you have that separate account ready to go.

Mike: That’s exactly what this is. This is Grandma’s old envelope method.

Andrew: Yeah.

Mike: What my grandmother did is get $100 of pay in a week, and she would put $5 for groceries, $10 for rent, $5 to give back to the community, blah, blah, blah and so forth. She always had enough money. If she needed groceries, she’d go to the grocery envelope and have enough money to buy groceries. It wasn’t always the same amount of money. If it was little, she realized we’re doing peanut butter and jelly this week. If it was a little more, we might get a roast chicken. But she would use the money that was available, and we all need to do this. Set up envelopes for different purposes.

Yes, we can use G/L accounts and accounting but the thing is, that’s what logical people do. We have to realize that we as humans, entrepreneurs, we’re not necessarily logical as much as we are emotional or behavioral. So by setting up all these different physical accounts that will give us the clarity of understanding what our money truly is available for.

Andrew: By the way, his work is stunning. I don’t know if I can show enough of it here up on the screen here. Let me see if I can do it. Where is it?

Mike: A lot of celebrities like this stuff too. And yes, really phenomenal cool stuff.

Andrew: I see.

Mike: If you have the means.

Andrew: Sorry? If you have means.

Mike: I said, if you have the means, it may be fun. [??]

Andrew: All right, so it makes sense the way that he was able to build his business and keep those big expenses from crushing him is by setting money aside every month in a separate bank account, not a separate entry in his QuickBooks, separate bank account.

Mike: Separate physical bank account. That’s the mandatory step. Before this he was doing the old bank account method saying, “Oh, I have money reserved.” But the natural tendency of most entrepreneurs is you look at your one checking account and you believe that money’s available for whatever your next need is. So, J.B. was catching himself without enough money to buy materials and he was getting in real trouble. Simply by setting up a separate account and reserving the money there first, he doesn’t get caught with his pants down.

Andrew: All right. Onto the next big idea and this one was a surprise, what happened to someone that you know, Ernie. The tactic is, you want to value profit over selling more so you can break out of the survival trap and you had someone who came in and did some lawn work for you. A guy who you’re calling Ernie in the book to protect his identity.

Mike: Yeah, and I protect his name because I question if the business formationed [SP] properly. But I wanted to include his story because it represents what a lot of entrepreneurs do. It’s called the up-sell and we’ve been told to do this. Ernie’s my lawn guy. He comes in and I’m in New Jersey. Fall is a big time for cleaning up leaves. He does it. He comes to my door and says, “Hey, Mike, there are leaves in your gutters. I’ll gladly go on the roof and clean it out. Its only another 200 bucks.” “Sure, do it.” He goes up there.

He’s up there. He comes back down, knocks on my door, says, “You know some of your shingles are coming off. I can replace those and I noticed your chimney’s falling apart. I can fix that.” “Sure.” Another 500 bucks or whatever. He did it.

The thing was it wasn’t his skill set. He didn’t have the tools. He didn’t have the labor. So he had to run out and get the resources to do it. At the end of the day he made some good money for sure on the top line, but he didn’t make a profit. And his big bet was, “Well, I had to buy this different equipment and ladders and stuff to take care of Mike, but I’ll make it up going forward.”

Well, the problem was while he’s up on the roof and trying to make the money on other things going forward, his blowers and rakes, and all that stuff is sitting idle on his truck. As we up-sell into more and more diversity we become more and more inefficient. So, the story I shared in the book is at the end of the day, yeah, maybe he took home 1500 bucks or 2,000 bucks that day, but when he’s at the bar talking to the other lawn guys and saying how much money he made, and he made twice as much as they did, he’s the guy who can’t afford to buy the beer. Someone else is buying the round because they’re doing one thing super efficiently.

Andrew: Yeah.

Mike: And that’s the key to profitability. Be the master of one thing replicated over and over, be able to do it faster and faster, better and better, and you’ll make margin profit, and you’ll be successful.

Andrew: You know what? I see that in text so much. Consultants specifically, they’ll come to me and they say, “I’m really good at installing WordPress. Do you want me to install WordPress for you?” “Yeah, absolutely. I don’t want the headache of doing it. It’s not that tough, but you do it.”

Mike: Yeah.

Andrew: And they come back and say, “Well, I can also install all these plugins, do you want me to do that?” “Well, yeah, go ahead.” And now they give me a price, they go do it, and they realize there’s some conflicts in the plugins, so they have to go and figure that out. But before they finish figuring that out they say, “I can also get you a new design for the site.” They’re thinking, “I’ll just go to WooThemes. I’ll buy the design then I’ll hire someone to edit it and make it look really nice.” Again, more and more things and they end up doing nothing right. I pay them more and I hate them more.

Mike: Yeah, you’re disappointed as a customer.

Andrew: Yeah.

Mike: It’s ultra-inefficient. The first time you run into the problem you had to solve it. The second time you run into a problem you got to find the commonalities of that problem and it still takes time. It’s by the hundredth time that you run into the same problem that then you get into the routine you can [??] with.

Andrew: Yeah.

Mike: But if you keep on diversifying what you do, every time you face a problem it’s your first or second time, pure inefficiency. It’s a loser. You make money after you hit the same problem 100 times over and know how to fix it every time perfectly.

Andrew: I don’t want to be your guinea pig if I pay for that and don’t tell me, I don’t need the excuses that it’s taking so long. That’s one of my big frustrations with consultant companies. And I get why they do it. They have a customer, now they’re told “grow that business.” But you know, there’s a limit to what you can do. Before you know it you’re like Ernie.

Mike: It’s a dangerous job. And by the way the shingles are coming off the roof. He hasn’t done it before, it was inefficient. So I call him and say “Hey Ernie, it’s not working can you come fix it?” He’s like “Aw, God” he’s like “I’m trying to go out and do leaves, uh, yeah I’ll come there.”

Andrew: And now you’re the difficult customer.

Mike: Yeah. He’s upset with me, he did a poor job up there, he’s not servicing his other customers, he’s losing other business to cater to something that he should have never done in the first place.

Andrew: Yeah and like you said he that things are going well because he’s more money but he’s the guy that ends up not being able to somehow not being able to afford to buy drinks. Alright, onto the final point that we pulled out here and that is to get an accountability partner who will help keep you profitable. You talked about this woman who did that. I’ve never seen this woman before. I know the company that she’s a part of.

Mike: Oh, Jean Nidetch. Yeah she’s the founder of Weight Watchers.

Andrew: Yeah.

Mike: That’s the founder of Weight Watchers and that’s her before and after. That’s her before on the left; that’s her after on the right. She’s still alive today, still thin today! So you can see in that left picture that she had a weight issue into her 30s early 40s and the awakening moment for her was she was at the food store and someone came up and “Congratulations, I didn’t know you were having a child!” And she wasn’t, and she said “That’s enough.” Up to this point she had tried diet plans and sure enough diet plans worked but then she went back into her habit and put weight back on. It never stuck.

What she found was she needed a support group so she founded Weight Watchers in her living room with other women that were struggling with their weight, and they stuck together. And as a team they were able to support each other through the process, and they were able to lose weight permanently.

Andrew: Yeah.

Mike: Same is true for our profit. You just learn the “Profit First” system in our video here together, and you’ll be able to do it. You can, and you should. The problem is there’s going to be a dark day where you need money because you have a new bill. It came in unexpectedly, and you’re going to steal from yourself by taking money away from your profit account, not paying yourself as much, and that’s when the system falls apart. You need an accountability partner or an accountability group.

I’ll tell you the one thing you’ve got to do is your accountant . . . This is a person that’s a trained professional. Like a trainer in a gym they know the numbers. They should be supporting you in driving profit in your business. And if your accountant doesn’t do that, shake them and wake them up to this process to make sure they do start doing it or find an accountant that does.

Secondly, you should surround yourself with other entrepreneurs that are also driving profit first in their business because now you need a support group for each other. You need accountability.

Andrew: So if you want to start out small, first of all, read the book. And second, get an accountability partner, one person who holds you accountable. How often should they meet?

Mike: Yeah, I suggest meeting twice a month. I believe in getting into what’s called a rhythm. I think we should pay our bills twice a month, do distributions twice a month. Every single day, not freak out in the moment. Get into a rhythm of doing this.

Andrew: And what happens in these meetings when they do it twice a month?

Mike: Well, what you do is you talk. You print out your bank statements. There’s no BS’ing. At Weight Watchers, when you show up, you don’t say, “Yeah, I lost weight.” You get on the scale, and the guy looks at it and says, “Yes, you did lose weight.” With your accountability partner you print out your bank statement for your profit account and say, “Here’s what I’m doing.” And so there’s no BS’ing around about it, and then you talk about strategies to improve profit and drive it forward for each other.

Andrew: Got it. Great. So, again, the book is called . . . I’ll bring it up on the screen . . . “Profit First.” The website you guys are looking at right now for the book is ProfitFirstBook.com. Mike, I obviously didn’t cover everything from the book. We covered some of the big ideas from it. If there’s one thing that people, when they get the book should jump into that I didn’t cover here today, what would you recommend? What’s one of the things that they should look at?

Mike: Just one thing is to realize that there’s a flawed formula. It’s called the Gap Formula. It’s generally accepted in accounting principles. It says that sales minus expenses equals profit. It’s been the foundational profit formula since the beginning of business, and I’m here to tell you it’s total bull shit. It’s the worst formula in the world because it says sales comes first, expenses come second, and profit is the remainder. It’s a leftover. It’s an after-thought which is absurd.

The core principle that I want you to walk away with is this. Sales minus profit equals expenses. Sell as much as you can. Take your profit first, and run your business off the remainder. The expenses is the remainder, and you’ll become more efficient and more innovative when you have less money available for your expenses.

Andrew: Oh that is a mindset shift. I paid so much money to go to college so I learned the opposite side of it. It is a mindset shift, and it does make so much more sense for younger businesses. Thank you so much for coming on here and talking about this. Again, the website is ProfitFirstBook.com, and if you can spell his name, MikeMichalowicz.com. And, of course, we’ll link over to it. I love this where you describe where you hired a professional voiceover artist to talk about . . . to say your name.

Mike: Oh yeah, yeah, yeah. He makes fun of my name. Well, no one can get it right, so make your weakness your strength. So if no one can say my name, might as well make fun of it.

Andrew: I love how you have fun with it. Thank you again for coming back here. Thank you all for being a part of it. If you’ve got anything of value, come back and let me know, let Mike know. And let us know what you ended up doing with it.

Master Class Toolbox

Transcript

Andrew: This session is how to use Lean B2B ideas to build products and businesses that other businesses actually want to buy from. It’s led by, Etienne Garbugli. A two time startup founder of Flag Back and Higher Voice, and a recognized user ability and UX researcher expert.This session is based on his book. Let me bring it up on the screen right there, “Lean B2B: Build Products That Businesses Want.” We’re going to use some ideas from this book and teach it to you right here today if you want to follow up, of course. Go get the book at any bookstore, or on leanb2bbook.com. Etienne, welcome.Etienne: Welcome. Thank you. Thank you for having me.Andrew: Let’s start off with a painful story that shows the audience what would happen, and frankly, what often happens with entrepreneurs who don’t follow the Lean B2B methodology. This is actually is especially painful because you experienced it.

Etienne: I did.

Andrew: What is this company and how did you experience it there?

Etienne: Basically, we ended up in 2011 I started a company with a few partners. It’s about the same time that the Lean start-up book out. We decided we were going to use some of these techniques. We started pitching from the first few days. We started validating ideas with true cold calls to a landing page and surveys.

We really focused on getting it right. Doing good validation. Our starting assumption was that we were going to solve the issue of [??]. Basically, the way job candidates perceive companies. We thought that was a big problem. We thought that was a good valid first assumption. We ended up holding . . .

Andrew: Yeah. The way candidates perceive companies is, frankly, one of the reasons why so many successful entrepreneurs do interviews on Mixergy with me because they want potential employees to hear about the company and to get to know the founder directly. I can see the importance of that. All right. You did your surveys. What’s the problem?

Etienne: We figured out that we actually built the first product because everybody was saying oh, this is interesting. This is super interesting. We had a nice UI. It was looking good, but it was just interesting. That’s all that came out. It was just interesting. Nobody was throwing money at it. The people in HR, they did not budget for this. They were not able to use it, actually. Actually, get some engagement with the product.

Andrew: That’s a good point. One of the reasons I wanted to start off with that is a lot of people already think that they know the B2B, the lean startup methodology, but just knowing a little part of it, it can also get you hurt and get you killed. How’s the company doing today?

Etienne: That company actually failed. We sped up. We ended up invalidating six different products over a course of eight months. I personally lost money. I spent a lot of time, a lot of sleep [??] just trying to figure out what would make it work. My partner ended up quitting the company. We finished not profitable at all.

Andrew: This is one of things we want to avoid for the audience. It’s not enough to just say, hey, I’ve surveyed potential customers. I’ve done a little bit of research. There’s more to it than that. We’re going to get into it today.

Etienne: Yes.

Andrew: If it’s done right it could be like the story of this plain jane website that’s actually doing incredibly well. What happened with these guys before they launch a site they created this. How did they do things wrong with carrot sticks and correct it with optimizely. Then we’re going to get into the big points here of how the audience can do it, but how did they do it wrong and right?

Etienne: [??] Cumin is one of the people I interviewed for the book. He started Carrot Sticks with a partner of his. I think they met at Google. They started working on a problem that was not their problem. Not something that actually knew personally. They were working on education for math. They were interviewing. They were speaking with a lot of parents.

They were trying to figure out if that was a big problem. If there were ways for them to get more involved in math education. They did that for a while. They actually hired someone to help them with their product, but it was just not working. They were not able to get significant revenue, or significant validation for the product.

Andrew: Here’s the point that you told me before we got started was important. When it came time to do [??] AB testing. When they went to talk to customers they didn’t just survey them. They didn’t just talk to them. They did one thing that made all the difference. What’s that one thing?

Etienne: They just went pitching. They decided okay . . .

Andrew: Pitching as in sales pitching.

Etienne: Yeah, yeah. They just decided we’re gonna ask people in agencies if they’re willing to spend 1,000 dollars on that idea, a project that they didn’t have, and they just went [??] contacts that they had. They were able to sell 2 different licenses before the product was even built. It’s good. It validated the fact that there was a business, a significant business [??].

Andrew: I see. So not enough to just do surveys and understand your audience, but in this case actually getting them to pay is the proof that what they’re telling you is real, and that it will lead to something that will help your business grow. That’s one of the ideas that we’re going to talk about here today. We pulled out here as a team at Mixergy, a few ideas that we thought were very important for anyone in the audience who’s building a business that creates products for other businesses to follow.

The first one is to use your network and experience to find market opportunities. I used to think of this as being an unfair advantage, but it is not. It is one of the key things that helps entrepreneurs whose self or businesses do well. Here’s Dharmesh Shah, a guy who was one of my earlier interviewees on Mixer G. How did he do this?

Etienne: So basically before he started Hubspot and his famous blog OnStartup, Dharmesh was working for a company called Sungard. While he was working at Sungard he had a great idea: to be able to [??] the company could build. So the idea was to build an application that could allow Sungard to transfer clients from one institution to another. He went to see his manager. He told him about the idea, and the manager initially, after thinking the idea was actually pretty interesting, [??]. So Dharmesh had no experience selling products so he just said $5000. Sungard is actually in the business of multi-million dollar deals with large companies, so it was really not in their range of products.

Andrew: So by talking to them, he got a little bit of information from them. It wasn’t in the range, so what did he do?

Etienne: He was passionate about the idea, so he decided to leave the company, build a company his brother, and they actually use the knowledge that they able to get at Sungard to build a company

Andrew: And not just the knowledge, but they ended up partnering with them. Sungard ended up distributing the product in return for half of the revenue.

Etienne: Yes. For the first three years of the business, Sungard was actually their almost-exclusive sales channel. That kind of deal would not have happened had Dharmesh not been an insider, not known about that company. It’s a problem he was able to see because he was inside the company. He knew the company contacts.

Andrew: I see this all the time: that people will leave a company and then go back and sell to that company. Their first B-to-B, business-to-business client is the company they used to work for. In his case, Dharmesh ended up, according to your book, earning over $15 million per year in sales, and then I found this press release online from back in the day – this is 2005 – he ended up selling the company to Sungard, right?

Etienne: Yes, exactly. A few years after, he was able to actually the company to his initial employer when they actually saw that the [??] was really valuable. So initially they had doubts, but he ended up convincing them [??] selling products and bringing them customers.

Andrew: All right, so first customer, first bit of feedback, first partnership, ends up being a company that you previously worked for. Let’s use that on fair advantage instead of saying “Well I can’t go back to them. I can’t talk to them about this business because, well, no excuses.”

Etienne: People tend to neglect their own experience, and we usually have insides on problems that other people don’t see. I think by working for a corporation, we were able to see things that other people don’t have the visibility on.

Andrew: Let’s take a look at the big board here. The next big idea we want to talk about is to choose a market with a significant problem to be solved. You want to make sure that people are going to be willing to pay for it, want to make sure that they care enough about it to not just do the surveys, but to ask for your product to actually be built and to pay for it. You give an example of this company.

Let me bring it up on the screen. I told you I actually admitted to you, I didn’t know them before you. What is this company? How do they do it?

Etienne: Basically, Taleo was the first ATS, or Applicant Tracking System. They initially built one of their first job boards in 1998. The company was losing a lot of money. It was trying to scale [???]. The founder was $280,000 in debt when he finally got some funding. In 2011, when we were still doing [???], the company was sold to Oracle for $1,900,000.

Andrew: To Oracle for $1.9 billion dollars.

Andrew: Yeah.

Etienne: So it’s the technology that powers most of the job boards for large corporations.

Andrew: And so what is the significant problem that they saw?

Etienne: I’ll tell you what. (?) the company’s founder was actually working for a company called (?) and at that time basically the way you would receive for applicants for jobs was through newspapers. You can put an ad. You would get a bunch of (?) by mail. You would look at them, read all of the different (?). Bring them home and try to actually identify which people are interesting and call for interviews.

Andrew: I can’t imagine days when resumes would come flying to you through the mail and you’d have to go through every one’s paperwork to see what the right candidate is. There are no screening processes that are automated because it’s all done by paper. All right. So this is the world that he saw. It’s a significant problem because companies are getting, I’m sure, flooded with resumes in many cases. And it’s hard to figure them out and it takes a while to get those resumes. So that’s what it made it a significant problem.

The solution he came up with was what?

Etienne: So basically once he realized that that was an issue he went to see the HR people from X-bo, validated that there was a significant need, that it was something interesting they would like. And he decided to use web forms to be able to categorize and qualify candidates for jobs.

Andrew: Right. So now people could, as a result, go to a form online, fill out the form with their name and all the details, et cetera and then send in the application. So the question I have as a follow-up to this is how do you know if it’s a significant problem? Is it enough to just go a company the way he did with X-bo and say, “Is this a significant problem or is it more nuanced?” You want to know if it’s a more significant problem.

Etienne: In this case it’s very difficult to see. The only validation I had was inside X-bo which was the company we were working with people we actually knew. So it was either to take that as real validation of the problem. So in the book I covered it in ways the importance of the problems. So there’s the pain that’s caused by the problem. There is the availability of the budget. There is the market indications. There was a lot of market education required.

Andrew: Market what? I’m sorry.

Etienne: Market education so the amount of education is required for people to understand the value of what is being sold.

Andrew: Okay. Let me bring my camera up so I can dig into these a little bit. You’re saying you want to make sure that there’s a budget associated with this.

Etienne: Yes.

Andrew: So it’s not enough to see that this is a problem for someone, but you want to see that there’s actual money dedicated to dealing with this problem.

Etienne: It’s not as absolutely essential, but the fact that money is associated with the problem it tells you about the priority of the company. So they’re already aware that money has to be spent on solving that issue.

Andrew: I see. So for me going and getting coffee down the hall is a problem every day, and frankly I wish every day I could have coffee right here, but it’s not a problem that cost me any money.

It’s not a problem that significantly takes away from my income statement month to month. I’m not willing to pay for it. I’m not willing to spend any attention on it. Got it. But researching, I guess, does cost me money. Researching guests and figuring out who the right one is does. So if you can find a process that simplifies it, I’m all in.

Etienne: Yes.

Andrew: So budget is important. Pain is important, right? So if it’s a small problem, if it doesn’t really hurt, no one wants the solution for it. But if it’s a huge dramatic pain, then a company is willing to pay for it. I get that. The part that I don’t get is market education.

Etienne: Yes.

Andrew: What do you mean by market education? How do we use that to see if the problem is significant enough?

Etienne: So it’s a matter of removing friction. So ideally we want something that we’re able to sell initially, go for (?). The more market education is required the harder it’s going to be to actually (?).

Andrew: If I have to actually explain to people using the (?) example, what AB testing is, why AB testing improves the bottom line. How AB testing gets done? The fact that it . . . If I have to go through all of that, it’s going to take me too long. It’s going to be too hard. Got it. And so then I would want to avoid it, but if I just say AB testing is done simpler and an agency gets it, then I have a significant enough problem and it doesn’t require too much market education for me to sell it. So . . .

Etienne: Exactly. And that’s what you want (?) and having $82,000 in debt because it was a new technology to market. So it was our firm to be able to convince people that they needed that technology.

Andrew: Okay. All right. Onto the next big idea here on the board and that is to create a bare bones, minimum viable product, that MVP, that generates value. You talked about . . . oh, this is an MVP that I love that sent me. Oh, where is that actual file? Did I just put it in the wrong place? I probably did. It’s really . . . Usually I would just brush past it and say, “All right, I have these other images, but this one is so important I’m going to pull that screenshot back up.” Oh, I did have it on the screen. Is this it? This . . . What is this?

Etienne: So basically, what happened with Cycler is the co-founder of the company ended up building a prototype of the tool in Excel.

Andrew: Oh, this is an Excel page that I’m looking at?

Etienne: Exactly, so this is the output of the [??].

Andrew: I see.

Etienne: So being able to use different macros, he’s able to populate the information and create a profile for a customer.

Andrew: You know what? The reason I was hesitating to show this for a moment, I thought I had the wrong one, was when I first saw it, awe can I even show it? I know how I can show it. This is the part that I saw. I’ll bring it up on the screen. There it is. The part that said some, number one, number two, etc.

Etienne: Ah, yeah, yeah, yeah.

Andrew: So, I thought yeah, Excel spreadsheet but, the rest of it does not look like an Excel spreadsheet.

Etienne: It looks like a really basic product. So, basically it works. It’s all based on just answering a few questions in Excel And it creates. It will create a profile.

Andrew: OK. So, what he did was. He had an idea and instead of coding it up, instead of building it all the way through, he just put it in Excel. What was the basis for his idea?

Etienne: Basically Wayne actually spent 15 years working in sales. He was using this kind of profiling to be able to better understand the personality of prospects. Using a psychometrics tool called Five-factors, was able to create a profile that would actually calculate different techniques to help sell to prospects.

Andrew: I see. I would understand if someone was looking at these notes here. Are they strictly business? Are they more about analytics? Do they have more champion potential?

Etienne: Could they be champion could they be early adopters?

Andrew: Sorry? Oh, are they an early adopter of yours? Got it. So, by putting it into an Excel spreadsheet using macros, he was essentially able to produce the features that he wanted his software to have. Got it. Then that was his first viable product. He was able to put it in customer’s hands to see what they interacted with. You know I, the other day, talked to the founder of this company. You need a budget.

Today it’s a multi-million dollar piece of software that sells tons online. But, when he first started it was just an Excel spreadsheet that had all your budget items and all you had to do was fill in the right cells in Excel and you’d have your budget. He started out with an Excel spreadsheet and then, once he got customers to buy that, then he went out and hired a developer to turn that spreadsheet into software that did, essentially, the same thing with a few more features. I think it’s doing now $4,000,000 a year.

Etienne: That’s pretty good.

Andrew: Yeah. Competing against Intuit and Microsoft Money.

Etienne: That is one thing you learn when doing research in large corporations, is that there are so many different tools that were created by employees using Excel. Excel is one of the largest competitors to start- ups.

Andrew: Yes.

Etienne: There are so many different products created with Excel.

Andrew: But, I understand that a company could use Excel internally for all kinds of things frankly, everything from contact management to deep data analysis. The part that always surprises me is that someone would say, “You know what? I’m just going to build my first version of my software using Excel.” Here’s what the first version looked like in this case. Is this what it looked like afterwards?

Etienne: It was a sheet . . .

Andrew: This is the final product?

Etienne: Exactly, yeah. This is what it looks like now. So, it really evolved but, it’s still based on the same items that were validated in those first few meetings with prospects and customers.

Andrew: All right. So, we have our minimal viable product. It can be as simple as an Excel spreadsheet and we want to move on to the next big point. Which is, to find, not just early adopters but, the right early adopters for our business. You give the example of Michael Wolfe. Here let me bring him up, this guy. Is that Michael? I think that is. Yeah.

Etienne: Yes it is.

Andrew: That’s him right off his Quora profile. That’s where we pulled that. He had a situation where he had opportunity to get early adopters and they were willing to pay but, he said, “No.” What was the business that he had and why would he turn away early adopters who were willing to pay for it?

Etienne: So, basically Michael and his co-founders were working together. They were, for six months, interviewing various companies. They knew they had portion [??] information security they needed to have that first client that would validate their model. But, also be a lighthouse customer to be able demonstrate to other companies that the problem is [??] and that there is a significant credibility in that in their company.

Andrew: Okay.

Etienne: They were able to sign small banks because initially they realized that banks would be the early adopter of their technology. [??]

Andrew: Banks care about losing information tremendously. In a banks case you lose information it’s really a financial pain. Then if banks are coming to him and saying, all right, we’re up for it. We’ll pay you to help us protect our data so we don’t lose information. Why would he turn them away?

Etienne: They made the decision to go enterprise. They really wanted to get the top tier companies. They wanted to have that first customer to be able to demonstrate what they can actually do with a large corporation. They would [??] a person to sell to a bank in a [??]. He turned down that deal because it would take them a lot of time to manage that account and be able to maintain that account, which would take away from selling to large corporations, which was their objective as a company.

Andrew: I see. If they learn how to create a product based on feedback that they get from a smaller bank they’re not going to be able to create a product that makes sense for a bigger bank. Bank of America doesn’t have the same issues as First Bank of Queens New York.

Etienne: It’s also a matter of . . . because in B2B one of the core is case studies. A case study from a small bank does not convince another large corporation to buy the product.

Andrew: Got it.

Etienne: It’s the same thing. If a large corporation sees that drop box has declined, or a smaller start-up is declined. That’s not going to convince them to buy large technology.

Andrew: All right. As a result they ended up getting Bank of America as a client. Is that right?

Etienne: Yes, exactly.

Andrew: First big one. They sold the company for how much? Do you remember?

Etienne: 450 million to Cemen Tech.

Andrew: Was it 450?

Etienne: I believe it was 450. [??]

Andrew: No, 350. Actually, it’s hard for me to tell. I think according to Venturebeat this article was 350.

Andrew: If they would’ve gone for a small mom and pop. If they would’ve come to, Andrew, for example, and said, Andrew, you have a company. You don’t want to lose your data. We’ll build something for you. I wouldn’t have been a good case study. I would’ve given them proper feedback on their product. All right. Boy, you know what? That’s a hard thing to do.

When you really want to sell. When you really want to see if your product is, if anyone loves it. When you want to bring in some money to turn away customers because they’re the wrong first customer is really painful.

Etienne: It’s all about product focus, actually, to the core thing for start-ups be we have only so many hours in the week. It’s important to be able to focus on a specific market.

Andrew: I have that, by the way, too with me at Mixergy. It’s so easy to take money from someone early on, but if I then build something just for them and not for a bigger community. It’s hard to . . . you know what? I don’t want to get to deep into Mixergy. I want to make this about how it works universally.

One of the cool things that I noticed about this headline is, look at this. Vontuse [SP] 350 million dollar win shows how patience and focus pays off.

Etienne: Yes.

Andrew: [??] In the sale we see what you talked about. All right. Now onto the big board. Establish prospect, trust. You gave us an example of how this company did it. Says directly out of your book, Lean B2B, and I will zoom in so we can see it.

Etienne: Yes. The companies called iBwave. It’s a very niche market. They’re basically doing tools to help design and building wireless systems. I should say one of their clients is actually the 49ers stadium in San Francisco.

Andrew: Yup.

Etienne: Basically, they have a software that helps people working in the stadium [??] design the optimal system for the wi-fi system, the wireless system.

Andrew: Okay. They had an issue that a lot of companies have which is you’re new. We don’t trust you. That you’re going to go away. Your code will disappear. What did they do?

Etienne: They actually, clients ask them to put the code of the product in escrow. [??]

Andrew: They put the code in escrow.

Etienne: Yeah.

Andrew: That means no matter what the client still has access to the software that they want. Either directly . . .

Etienne: Exactly.

Andrew: . . . through iBwave, or through the code that they’ll get in escrow.

Etienne: [??]

Andrew: The client gets the code out of escrow if what? What are the contingencies that allow the client to get that code?

Etienne: It’s based on the product being successful, so, delivering on the value. [??] demonstrate credibility.

Andrew: Okay.

Etienne: Initially they didn’t have a brand name. No one knew about the company. That was one way to speed up that adoption of the technology.

Andrew: I sometimes wish that consumer based businesses and businesses that are aimed at smaller companies will do the same thing. That they say, look, we want you to use our software in your business. We stand by it. We believe it’s going to be a success, but if for some reason it’s not a success we’re going to give you the source code so you can continue on. I’ve had so much software on Mixergy itself from companies that were just getting started, and I believed in them, and I wanted to support them. We implemented it on Mixergy and then suddenly the company was sold and the product was gone or the company closed and the product was not supported anymore.

Etienne: Not in this case because they demonstrated that in 55 days companies could recuperate their investment. And for the last ten years they’ve been non-profit 100 less in Canada.

Andrew: Wow.

Etienne: It’s actually a very successful bootstrap business.

Andrew: All right, let’s take a look at the next item on the big board. Pivot tactfully to grow your company in the right direction. Let’s take a look at dotCloud. How did dotCloud do it?

Etienne: So basically dotCloud was a platform as a service company and they ended up at . . . It was a success [??] a few companies were using their solutions, the developers were using their solutions to implement code. But they realized that it was a very crowded sphere and there were big players like Heroku in that sector. And they thought about it, thought about it and they figured out that they could actually do what [??] calls a zoom out pivot which basically means going up one level and creating a platform around what you’re working on.

Andrew: Okay.

Etienne: So then you get their platform was successful, but they ended up creating what they call the docker containers which basically allows the developers to transfer codes without having to redevelop connectors to different technologies. It’s possible to work in different environments and move environments effortlessly.

Andrew: Okay, and . . .

Etienne: So what happened after . . .

Andrew: Sorry, go ahead.

Etienne: Yeah, so what happened afterwards is it quickly became super popular. There is a lot of companies that started using it. There were meetups. People starting their reactive groups talking about a docker. So in just a few months it really became super popular. And companies like Google adopted the technology and now they’re working with docker I.A. afterwards. So it really validated that change with the success.

Andrew: We can kind of see the before and after on their webpage today, dotCloud. Is that platform as a service on the left, right here? And then Docker on the right, the new one.

Etienne: Heroku actually became one of their clients.

Andrew: Who did?

Etienne: Heroku, so one of their competitors initially became one of their users.

Andrew: Oh, Heroku, so with the left business they were competitive with Heroku and now they created something that even Heroku could be a client of.

Etienne: Exactly, exactly.

Andrew: Got it.

Etienne: So they created a new [??] for them by going one level up.

Andrew: I see. Let me see if I understand that right actually. The zoom out pivot is, for example, Mixergy does interviews, interviews do okay. Well, actually they do really well, but let’s suppose they only did okay. I would zoom out by saying I now have a platform for doing interviews instead of me doing interviews myself, anyone could do interviews using my platform and I’ll just make it easy for them.

Etienne: Yes, yes.

Andrew: That’s what you’re talking about, okay.

Etienne: Yes. Another example is there’s a company here in Montreal. They were doing software through email, through email integration and they became an A.P.I. for companies wanting to use email as a tool.

Andrew: I see.

Etienne: [??] the A.P.I. to connect to email inbox.

Andrew: I see. All right, onto the final point which is to keep your business lean to avoid quitting. Let’s talk about another painful, painful example of that. Here it is. You had that with this . . . Where is that?

Etienne: Flat Back, so it’s a company . . .

Andrew: This was the only screenshot we can find.

Etienne: Yeah, yeah, it’s another business URL.

Andrew: What was Flat Back?

Etienne: Basically we created a business to ad- . . . We created a tool to add a layer on top of the web to be able to add what we call flags or comments on elements of web pages anywhere on the web. We were bootstrapping the business, so we had money that we invested in the business and we had the developer working. But it ended up taking six months more than we had expected.

Andrew: Six months more to create this thing.

Etienne: To create it, exactly. It’s the creators that are the technology behind that would actually work for [inaudible 00:04:38] on different browsers.

Andrew: And you’re saying that, of course, if it takes too long and you don’t have funding, then you’re going to go out of business. By keeping lean you have a much bigger runway. What could you have done to go even leaner than you did back then?

Etienne: We should have actually got feedback from users much earlier. So we waited nine months for the [??] and when we did, we actually valued that some large companies were interested in technology.

Andrew: Okay.

Etienne: But we ran out of money without being able to build the last few features that we required. We needed to be able to sell the solution.

Andrew: I see.

Etienne: So after that, the company collapsed based on just . . . or lack of funding and not being [??] to actually sell the technology.

Andrew: So feedback sooner and what we’ve learned in this conversation is not just feedback through surveys, but feedback through will you pay for this, we’re about to finish building it.

Etienne: Exactly, exactly.

Andrew: All right, so let’s . . . That screen just went blank because I was trying to see if I could show the Vimeo video that you guys have. This is from you. It’s still up online.

Etienne: Yeah.

Andrew: See. All right, why don’t I instead of showing that, show the book. This is the book that shows the process, the lean startup process as it applies to business to business. And we’ve seen some of the ways that business to business is different from consumers. When you’re selling to a business, yes, they’re okay with the lean product, but they also need the safety and the trust which is why we talked about escrows and option for giving trust. Right? Consumers are willing to be . . .

Etienne: And reduce risk.

Andrew: . . . much more trusting, businesses need much more assurance. Businesses are willing to pay upfront to prove versus consumers which are more you could have just tried for free. That’s why you wanted to write this book.

Etienne: It’s [??} a book I would have loved to read as an entrepreneur starting [??].

Andrew: All right, thank you so much for doing this. Anyone who wants to follow-up can check out Lean . . . My head’s going over to the right. I might as well just point and bring it up on the screen, LeanBtoBbook.com. That’s what’s been on my right monitor the whole time we’ve been talking. Thank you so much for doing this. Thank you all . . .

Master Class Toolbox

Transcript

Andrew: This session is about how to understand your target market so you can grow your community and it’s led by Stephanie Burns. She is the founder of Chic CEO, a site which helps women build businesses. I’ll help facilitate. My name is Andrew Warner. I am the founder of Mixergy, where proven founders, like Stephanie, teach. Stephanie, we’re going to talk about the success you’ve had with Chic CEO and how much help you’ve given other entrepreneurs. But it’s important to start off by talking about the time when you had a challenge getting traction. What was that period like for you?Stephanie: Well, Andrew, truly Chic CEO started from zero.Andrew: Mm-hmm.Stephanie: I had no money, no marketing budgets. I worked in marketing, but I had no resources really to market Chic CEO and grow my community. So for a long time there, it was really just a very small list, maybe two to three hundred people that were friends of mine that I’d grown throughout my network here, living in San Diego for some time.

Andrew: Mm-hmm.

Stephanie: And now we’re up to 60,000. But I had no money to do anything like that. So I really had to start getting scrappy and it was rough.

Andrew: And this is the way the site looked back then when you were just getting going.

Stephanie: That’s the very first site. That was our very first advertiser there on the left. Yeah . . .

Andrew: Shoebox, that was the advertiser.

Stephanie: My very first advertiser I got, yup.

Andrew: And at the time you didn’t know how to get inside people’s heads. As you look at this page, what makes you say, “Mm, I’m off because I didn’t fully get the customer back then, the community member?”

Stephanie: If you notice, there is no way on that homepage for me to capture an email address. There was a join button but it’s in the main now but it’s really buried. And there was really no way for me to engage with my consumer. It was more of me just talking at them, hoping that they got the information. But I was getting zero feedback. I was getting no . . . my list wasn’t really growing. It was a pretty rough period.

I wanted to create a resource that women could use and understand and it would be helpful, but my mistake was that there was no feedback loop. There was no way for me to engage with them and bring them onboard.

Andrew: Ah, I see, okay. Not even basics of email and all the stuff that we’re going to talk about obviously wasn’t there yet, either. Today you are very good at it. How many people did you say were in the community?

Stephanie: About 60,000.

Andrew: And this is one way that you do that, that you engage people. What are you doing on Facebook?

Stephanie: We do a lot on Facebook. We have about 14,000 followers now and this program here is an old program that we used to have . . .

Andrew: Mm-hmm.

Stephanie: . . . called the Chic Siren Membership Program. And it took me a long time to put together a membership program. I didn’t want to put any information behind a cash curtain. We finally opened it up. We only had 8,000 people on our list at that point when I launched that, and that was the first time that we really dug in deeper with our consumer and asked them what they wanted. And from then on is when we really started growing a whole lot more.

Andrew: I’m looking here at my notes and now you have the private group where people get to talk to you, you have the monthly mixers where people get to talk to you, you have lots of different ways as we’ll see here for people to talk to you so you can understand them, and that’s what you use to speak to future members of your community, by showing them, “Hey, I understand what you’re thinking.”

And the way you understand it is by getting inside people’s heads. Let’s talk about how you do that. I’ve got a big board here. Let me bring it up to show the audience. These are the different tactics that we’re going to be talking about when we get as specific as possible. And the first thing that you say is, “Do not assume that you know what people want.” And you did that here. What are we looking at here?

Stephanie: Well, one of the big things that we kept hearing was our community didn’t have access to funding.

Andrew: Mm-hmm.

Stephanie: They were frustrated. They couldn’t grow because they didn’t have any money. And it was a really interesting time for us and crowd funding was really big. And if you’re in the startup community, you know what crowd funding is.

Andrew: Yeah.

Stephanie: You understand what that means. Our community did not understand what that meant. We moved forward building our own crowd funding platform without asking them if that’s something that they wanted. We just assumed that they would want their own crowd funding portal and we launched it to Crickets.

Andrew: I see.

Stephanie: We had a few people on there but truly, nobody understood what a crowd funding platform was. They had heard of Kickstarter but they had no idea what it meant to crowd fund. And they expected us to be doing the promotion for them with the crowd funding platform, and as you know and what most people know now a year later is that crowd funding is really about your own crowd. So if you don’t have a crowd you need to build one in order to have a successful crowd funding campaign.

Andrew: I see.

Stephanie: It tanked, it tanked.

Andrew: I’m looking at the date here. This is from early 2013, and as you said at the time many people outside the tech community didn’t know what crowd funding was. And I can understand that people would say, “Oh Stephanie needs crowd funding. Oh terrific. I’ll post my project up there. I’ll post my business up there, and she’ll get a crowd to fund me. Life will be good.”

Got it. So that’s what they thought and the other thing that you noticed was that they didn’t even want it. You didn’t check in with them and say, “Is this something that you want? Is this something that you’re looking for for us to do? As a result, not just crickets. You try to find it today. It’s not up on the site any more, is it?

Stephanie: It’s not. We took it down a long time ago. The one thing that we did do that was smart was we white labeled a crowd funding platform. So that we didn’t put a ton of upfront cost in building our own before we tested it, but we had so many resources, so much time and effort into building it. And it just tanked. Nobody wanted it. Nobody understood it. And we just finally took it down and decided to revisit it, and we might revisit it at some point when it makes sense. But we’ll be definitely asking our community first if it’s something they want.

Andrew: I see. And so I was going to ask you, what would you today if you wanted to launch it to make sure that it was useful to make sure that it was something that people wanted. And actually it occurred to me that it’s the wrong question to ask. You wouldn’t say, “I’m going to launch crowd funding. How do I make it useful?” You would start off with not the idea but with the conversation with people and then if that drives the idea, that’s when you investigate ways of doing crowd funding. But you would say, “I want to do crowd funding. Hey, guys, how do I do it right for you?”

Stephanie: Exactly. I would first start with the question, you know, if you’re having trouble with funding what are you looking into now? What is working for you? What isn’t working for you? How can we help you? And we do that in a lot of different ways with our networking events that we do, with our social media surveys, our email newsletter to reach out and really try to get in touch with our consumers and talk to them about what they want.

Andrew: Okay. Let’s look at another way that you do that. Back to the big board here, you say get face time with people to make sure that even the way you’re communicating even your elevator pitch is understood. And you had a situation where you were pitching investors and customers and what happened when you got face time with them? What did you see on their faces?

Stephanie: We did a mock scrub, like a mock pitch to investors, and the room, they just did not get it. They didn’t understand it at all. There was actually somebody in the room that had actually been a subscriber of ours for a long time who didn’t quite understand what we do. And that was back when our old . . . we had our old side issues what you should, and it had our old tag line which said . . . Our tag line was entrepreneurs with style.

Andrew: Let’s bring it up right now here. I’ll zoom in on the tag line from before, entrepreneurs with style.

Stephanie: Yeah, entrepreneurs with style.

Andrew: And when you showed it to people, you look at their face and you can tell that what? What did they understand from that?

Stephanie: They thought we were a fashion brand for entrepreneurs.

Andrew: Got it.

Stephanie: [laughs]

Andrew: Clothes for entrepreneurs.

Stephanie: Yeah.

Andrew: I see. And today because you saw that in their face, because you noticed that’s what they thought, this is what the tag line is now. What does it say there?

Stephanie: It says empowering savvy entrepreneurs.

Andrew: Got it. And so how do you know now actually that empowering, what empowering means to people? Is it . . .

Stephanie: Where is the focus group we have?

Andrew: I see.

Stephanie: We had some face time for sure.

Andrew: Okay. So now you know that they understand empowering to mean what? Courses. It means community. What else? What does it mean?

Stephanie: Tools, how-to, community, networking, ways for them to do business with each other, ask. Most of our information is on there. It’s free. So you can come and learn how to write a business plan (?) how to write a press release, financing, funding, marketing. Anything you could possibly ever want to know about starting up your business is on (?) for free.

Andrew: What’s the tool that’s available too? You’re saying you also do tools.

Stephanie: Yes, we have a (?) platform that we sell called “Chic Works” and CRM email marketing software that we sell. And we use it to run the entire (?) back end. So we offer that to our customers at a very discounted price, or you can get it free with some of our paid membership programs.

Andrew: Got it. Here’s the URL for that. That’s chicworks.com. All right. Onto the big board then. Next idea for us to talk about is to find the space in between and use people’s skillset to serve a new market or to use your skillset to serve a new market. What does that mean?

Stephanie: It’s an interesting way to think and how [??] think in trying to find the spaces in between. So we get a lot of women entrepreneurs that come and ask for opinion or challenges and what we like to do is talk with them about the spaces in between. How can they use their company and their vertical to find ways of opportunity that they might have expertise in that they might have not thought about before?

So that’s something that we always try to focus on with our consumer base, with our community or the private clients that I work with. So it’s really about digging in . . .

Andrew: Mm-hmm.

Stephanie: . . . understanding what they do in our target market and then helping them find it.

Andrew: Where do you put the spaces in between? Maybe, would it help if we looked at an example? How did that play out with this site?

Stephanie: So Innovation Nation, that’s a really amazing site.

Andrew: Mm-hmm.

Stephanie: The woman who owns it, her name is T.D. She’s up in the Bay area and she really has such a cool business here.

Andrew: Mm-hmm.

Stephanie: She was working for some big box companies like the Googles and the Facebooks and she would come up with these really amazing ideas and then the company would take them . . . Andrew: Mm-hmm.

Stephanie:. . . from her. So she noticed that there’s all these small independent inventors that aren’t making money off of their ideas and they’re getting stolen by the big guys. So she created this business. She finds that really interesting space in between that. Well, she created a marketplace where you can upload your idea – and the patent laws changed last year, I think, in March – so she followed the new laws. And you can protect your idea here and if you want to sell it to the big box stores, you can. Otherwise, you can protect it for a year if you want to work on it, which is really interesting because then she created basically ecommerce of ideas between the big box guys.

Andrew: Mm-hmm.

Stephanie: So she really found that space in between, which was really . . .

Andrew: In between two different people.

Stephanie: Two different people, two different verticals, two different industries. Maybe you find your skillset or your expertise and you can pop it into another. So it’s really finding that area where you can fit in and make a difference.

Andrew: Do you have another example of that? I still don’t fully understand how this works.

Stephanie: So finding the area of opportunity, and really, this conversation started out with the founder of Yummie Tummie.

Andrew: Mm-hmm.

Stephanie: She was a real housewife of New York, Heather Thompson, and she and I were actually . . . I was interviewing her. And she found an area of opportunity to create shapewear by looking for those holes. So we all find areas of opportunity that aren’t being served. I found it with this market.

Andrew: What did she do with Yummie? I’m looking for a Yummie Tummie website.

Stephanie: It’s shapewear.

Andrew: Shapewear, okay.

Stephanie: When I ask her how she comes up with new ideas or how she looks for areas of opportunity, she mentioned she looks for the space in between, the places that aren’t being served, the communities that aren’t being served, the . . . another good example that I love is Quirky.

Stephanie: He found a way for everyday inventors also, to come in and provide them a place to do social inventing where we do it all together. So it’s really . . .

Andrew: I see.

Stephanie: . . . really an innovation-type play.

Andrew: So if I understand you right, for him there was a market for the big innovators who worked at big companies, big inventors at big companies like General Electric. There was a place for the people who were just tinkering in their garage and doing it for their own fun. But the person in between there, the guy who wanted to invent something and sell it, not on a huge scale but still sell it and get it out there to people who had this shared interest, that person wasn’t served.

Stephanie: Yeah.

Andrew: That inventor didn’t have the ability to reach a market and that’s where he went, in between the small tinkerer who did it for himself and the big guy who worked for a big company.

Stephanie: Right.

Andrew: Is that what you’re talking about?

Stephanie: Yeah, definitely.

Andrew: Okay.

Stephanie: Yeah, and he found a huge market. I started with Quirky in the very beginning. I was one of their very first thousand people and now they have probably half a million inventers. And it was such an interesting thing to watch him find this new market.

Andrew: Yeah, it is.

Stephanie: So I think it’s important for us to understand that we can find spaces in between and find a really big market just like Quirky did.

Andrew: It’s interesting. The reason that I brought up General Electric is that I think that’s the company that they’ve now partnered with. So these small innovators now have access to big companies, too, to work with. But these are some of the products that [??]

Stephanie: If you search Chic CEO, you’ll see I won the very first invention challenge with G.E. I invented a milk jug. [laughs]

Andrew: Really?

Stephanie: Yeah. I did. I won the very first one.

Andrew: There it is.

Stephanie: There it is. That was me. So, yeah, they’ve found the ways for people to come in and get involved and this is probably the best example, so . . .

Stephanie: Yeah. So this is the winner and GE paired up with Quirky and we went to Maker Fair in San Francisco and had a 3D model built of it. It was on Fox News. It was . . .

Andrew: Is the image here on the site? Let me see.

Stephanie: It should be somewhere. But that’s such an amazing example of finding the space in between and Ben Compton (sp) did a great job in figuring that out so if you have a business or a community that’s not really thriving, it’s really fun to find maybe that space in between that nobody else is serving.

Andrew: This is it?

Stephanie: Yeah. That’s it.

Andrew: You know what, I didn’t realize this is you. I didn’t realize you did this.

Stephanie: I did. Yeah.

Andrew: Oh. That’s cool.

Stephanie: Mm-hmm.

Andrew: So there. It’s a milk jug at home that tells you when the milk is expired or getting close to.

Stephanie: Yep. By testing pH instead of the expiration date which is . . .

Andrew: Oh wow. So even more accurate than the expiration date.

Stephanie: Yep. Yeah.

Andrew: Wow. Congratulations.

Stephanie: Thanks.

Andrew: All right. On to the big board then. Most people, frankly like me, if you hear the same question over and over again, you feel kind of upset with people. Why do you keep hassling me with the same thing? That’s the way I used to be. Today I’m learning to be otherwise and what you’re saying is, if you’re hearing the same question over and over again, look for a solution. Solve it one time. You’re seeing a big need. And so, do you have an example of how you did that? Maybe when you were an MBA student?

Stephanie: Yeah. That’s exactly how I came up with Chic CEO. I was getting my MBA. I was in grad school and it was about 2008 and all of my girlfriends were getting laid off from their jobs and they kept asking me, “How do I start a business? I have to start doing something on the side. Whether it’s consulting or wedding planning or personal shopping or anything like that. How do I get started so that I can pay my bills?” And I kept saying, “I have no idea. Why are you asking me this question?”

And they said, “You’re getting your MBA. Aren’t you learning how to start a business?” And I said, “Well, no. I’m not. I’m learning how to run a business. I’m learning statistics and global marketing and strategic management. I’m not learning how to go down to the courthouse and fill out which piece of paper and what legal structure I should be.” So again, there’s that kind of space in between.

I noticed that all of my girlfriends were starting a business out of necessity and they had no clue how to do it and the resources they were finding, the SBA’s and the scores while they’re good, you kind of need an MBA to understand what the hell they’re talking about. So I brought all of my friends into my living room. I gave them a ton of wine. And I started asking them a ton of questions. What are you missing? What are you confused about? Have you picked a legal structure? What are you going to do about your taxes? And they just stared at me blankly.

These were not dumb women. These were very smart, brilliant friends of mine. And I had 15 of them in my living room and I thought, my god, if I have 15 of just my friends in my living room asking me these questions, nobody’s serving this market. So I started doing a ton of research on women starting businesses and I started seeing this upward trend of female entrepreneurship and today women are starting businesses almost 2 to 1 over men.

So it was really a market decision that I wanted to focus on this group because they were growing so quickly and so, again, it was kind of finding that space in between, but I was getting this question asked over and over again and I couldn’t understand why I was getting it, why they couldn’t find this resource. So I finally built it for them.

Andrew: And so for you it was and still continues to be in person events where people are telling you this. If someone’s listening to us and says, “Hey, you know what? No one’s asking me the same thing over and over again. I’m not like Stephanie in school where people happen to be asking me about how to start a business. I’m not like Andrew with a big audience who happens to keep asking him questions and he can look for commonalities. I’m just getting going. How can they find these questions that keep coming up over and over again that they can then use to build a business based on what people want based on their internal psychology?

Stephanie: You know it’s interesting, I kind of troll question boards like Cora, Yahoo Answers, things like that to see if there’s discussions. Reddit. Things that would interest me that I might have an expertise in to see if there’s any common threads.

Andrew: I see.

Stephanie: I also look for things that might be happening in my friend group or my peer group to see if there’s common frustrations that are coming up. People say to start a business out of passion, and I really believe you should start a business out of solving a problem. So it’s really about asking maybe your peer group or people . . . or a sub-set of people that you might have an expertise in already to see if there’s an issue that keeps popping up and that you can kind of cherry pick something out.

I also have a (?) on the site called businesses we wish someone else would start.

Andrew: Un-huh.

Stephanie: [laughs]

Andrew: Where people go in and say, “I wish someone would start this business for me.

Stephanie: [laughs] Yeah.

Andrew: Where is that?

Stephanie: That’s in our elite portal so it’s private, you must remember.

Andrew: Gotcha.

Stephanie: We used to have ads pop up in there.

Andrew: You know what? You mentioned trolling Cora, and I understand the power of going to those kind of sites, but one thing that I noticed is I thought people trolled the contents of my site and see what people are complaining about or saying, “Andrew, you missed this. You didn’t cover it.” And specifically what many who did that noticed was I don’t cover the early stage of a business. I’m not here to feature a person who just started a business and maybe did 5,000 a month in sales.

I’m looking for the mega hits. And so people would complain in the comments. People would say, “You should interview smaller companies. You should interview bootstrapped entrepreneurs like startup businesses and what I noticed was there are few people who caught that and said, “You know what? I’m actually going to do that and create a site that will answer this frustration that Andrew doesn’t seem to be responding to.”

So I can see the power of Cora, but I can also notice from firsthand experience that it can be done on other sites too and smaller communities even.

Stephanie: Absolutely. And that’s a very wise person that can go and start to notice that there’s areas of opportune space in between where you can find that small frustration and actually find a big market within it.

Andrew: Let’s look and see what else we’re going to talk about, and that is deliver the information the way your target market wants it. For you it was, again, in person, isn’t it?

Stephanie: Some of it is. I think that obviously if we’re 60,000 people entrepreneurs I can’t do that all in person.

Andrew: Mm-hmm.

Stephanie: So we started to notice that there’s a few ways that our community has to learn, and a lot of it is through interviews and webinars, and some of it is in person. For me I was learning more from the in-person so I was benefiting then. It was really more about benefiting me to say that selfishly. The in-person stuff, the face time, was really important in learning how to serve your target market best. And for me if I didn’t have that face time I wasn’t really, really getting in and digging with them.

We did have our (?) program which we talked about earlier today, and that was really a program that was $19 a month and the women that were in it got our downloads and our templates and some tools. They didn’t have access to us. We started to noticing that we were getting the same questions over and over again there, so we decided that we would create a conference to bring in the people that were asking the same questions over and over again to help them get what they needed in person without (?) and things like that. And it really worked. So . . .

Andrew: How did that help you understand that you needed to do a conference as opposed to a webinar as opposed to sharpening the tasks that you already have up on the site and the tools that you’re already have up on the site? How does a complaint lead to a conference that tell you, “We want to deliver . . . People want our content delivered in person.”

Stephanie: I think if you’re going to get the complaint over and over again, then you should really follow it. So . . .

Andrew: So wait. Were people just saying to you, “I don’t like understanding and learning online. I need to . . . No, they weren’t. It’s not that direct, and when people are that direct, it’s often not useful.

Stephanie: [laughs]

Andrew: Because people want it exactly the way they want it, and it doesn’t necessarily make sense for you. Hey, Stephanie, call me up every morning if you were to ask people what do you want.

Stephanie: Yeah.

Andrew: So how do you take what they’re expressing to you and understand that what they really are asking for is information delivered in person.

Stephanie: Well, I think it’s a path that you need to follow. So if you keep getting the complaint over and over again or the question over and over again, it becomes more of you need to ask the question. So I would get questions over and over but we’ve already answered in the program. And so I started asking them, “Well, have you read what’s in the program? Have you read what’s on the site?” Well, I just wanted to talk with you a little.

So if you keep getting the complaint over again or the question over and over again, it becomes more of you need to ask them questions. So I would get questions over and over that we’ve already answered in the program, and then so I would start asking them, “Well, have you read what’s in the program? Have you read what’s on the site? Are you . . . Well, no, I just really would like to talk to you. Can I take you to coffee? Can I take you for a drink? We have a monthly networking service, and they’re really valuable because first of all I get to talk to a bunch of people, my target audience every month during this time.

But when people say, ”I want, can I just pick your brain just if I could have 20 minutes.” I’ll say, ”Come to this networking mixture and we’ll do it there.” But if it gets more involved and I start asking more and more questions. I say, ”You know would a full day intensive be something that would sound like, like something you would want?” If the answers yes and I ask a few people and then that turns- and those people come and they get what they need. Not everybody learns the same.

Andrew: Got ya. So you’re hearing their frustrations with the material that’s there and you’re prodding to see. How do they want the information delivered?

Stephanie: Right.

Andrew: You could have just as easily asked, ”Would an intensive help?” And heard back from them, no I don’t have time or interest in traveling that far. And then you might have moved onto, well would it help if we did a Google hang out once a month? Would it help if we did more of a Chat- board? I see, so you’re looking to see what they think they want for as a way of communicating information to them.

Stephanie: Right, and I think it’s really important to understand that about your target market. How do they want their information from you? Do they want you to come and work with them one-on-one? I work with private clients but obviously that’s quite a bit more expensive than if they just join the Chicory program which is only $49 a month and they get videos.

So it’s, you know, obviously the in persons stuff is going to cost them a lot more but if that’s what they want and that’s how they want to be served. Then make that available to them and you’ll see your target market grow.

Andrew: Okay, let’s go on to the big board here. The next point is to use details to delight your target market. You did that at your event, I think this is a part of how you did that at the event. Is this from your conference?

Stephanie: It is yes.

Andrew: I wish we had a picture of the bathroom, which we’ll talk about in a moment. But as I look around here so what is some of the detail that you’ve laid out for people that we may not notice?

Stephanie: The bathroom was a huge success. We got so many comments about the bathroom.

Andrew: What exactly happened in the bathroom?

Stephanie: It was just, you know, we had signs up everywhere. We had inspiration quotes up, we had fresh flowers. Everything that we do, was part of our branding were Chic CEO, so everything that we do has to be chic. And those tiny details are so memorable and sometimes people forget about the detail. But the more detailed you get in our branding and you services and how you interact with your target market. The more loyal they’re going to be and the memorable you’re going to be to them.

So having- we had signs on the bathroom stalls. So when they went to the bathroom and they shut the door it was a quote from Coco Chanel or Oprah or Tina Fey or something like that to make them smile or laugh. And there were signs up that said, ”You look gorgeous today.” There were flowers everywhere. It was a really beautiful, beautiful event. And that was really memorable to them.

So really understanding your target market, really means what you can do in the details that will really delight them because those things actually matter. You know, Apples probably the best testament to that. And I think that for us it’s really important to make sure we delight and surprise within our brand constraints.

Andrew: Let’s take a look at this, this is the welcome section, the welcome area.

Stephanie: Yeah, one of them, and that iPad is from one of our sponsor’s Mopro. You see we have flowers and everything was chic.

Andrew: For some reason I don’t notice the flowers but I mean, my eye wouldn’t go to the flowers but they would still affect my sense of the place. I’m looking kind of in the left corner, I don’t even know if you can see it up on your screen they’re glasses. What are those about?

Stephanie: Those are from our sponsor, Mopro.

Andrew: Got yea. This is part of their logo.

Stephanie: Right. And in the back there where the people are we had this huge board up, for people to put business they wish someone else would start, on Post-its. And you could walk up and look at them and take a Post- it if you wanted, if you’re just thinking about a cool business or something like that. We had a panel discussion but the panel discussion looked like you were sitting in a really beautiful living room. We had an interior designer come in and bring in a really cool coffee table, gorgeous chairs, so everything felt really chic, it felt, like I said within our brand constraints.

I think those details really matter when you are addressing your target market. Because they tend to expect those things from you. Everything had to be chic otherwise we weren’t going to do it at all. Remember when we were talking about boring business information which was yeah, I said it can be pretty boring, you know, we want to make it fun, we want to make it chic, and we want to really play within our brand on that.

Andrew: All right lets go on to the big board. You say we need to look for places, look for those connections in the me to areas. What is a me too, in this context?

Stephanie: So, yeah, you want to connect, really connect with your target market. Quick connection happens when you (?) And I’ve always said this and I truly believe it, I don’t think that if you want to build a community, (?) community, that you want to trust you. You have to have some sort of hierarchy and MeToo is really a great way of building trust and interaction with your audience.

And when I’m talking to my private clients or talking to anybody that I reach out or reaches out to me, I don’t BS them. I don’t pretend that I have it all together either. I’ll tell them, “Yeah, I cried at my computer this morning too, sister. We’re all in the same boat.” Entrepreneurship . . .

Andrew: Why do you do that? I cried at my computer too is something that most entrepreneurs, especially people who are teaching don’t want to admit to their audience. You say that, why?

Stephanie: Because I don’t want them to think that they’re alone because they’re not. We all go through it, every one of us. I don’t care who you are. You sat at your computer and cried about something real, terrified, and then it is not easy. This is the hardest thing I’ve ever done, but the most rewarding thing I’ve ever done, especially women. We’re risk givers. We’re afraid to take the risk. In thinking, oh my God, what have I done? What if I screw this up? What if I have no idea what I’m doing?

So that’s (?) so that you don’t have to have every single answer right away or know everything or have to have your MBA here for you. I get it, I understand, I know where you’ve been, and nobody’s going to understand or trust me or think that I know what I’m talking about if I haven’t been in their shoes.

So it’s important for me to be as completely genuine and transparent with my audience as possible. And, yeah, I’ve learned some things along the way obviously, and I try to impart them as much as I can with my audience. But if I pretend to my audience that I’ve got everything together and it came easy to me, I wouldn’t trust me. So, yeah, I want them to feel like they’ve got an ally in this and that I’ve been where they are.

Andrew: Here’s what my team put together in the notes in preparation for this session. They said that you had an entrepreneur ask you if she could pick your brains. You said yes. She had an opportunity to learn from you, but you also had an opportunity to learn from her. In that conversation when she said, “I don’t know if I have any business with getting started with a business.” And you thought, you know what? I’ve felt that too and then you expressed that.

In that shared moment you guys bonded and as a result she became a private client. And that is the point that you are making that if you share those moments and people feel like me too or if they shared and you expressed that you also felt it, that connection, that similarity is the bonding that allows people to feel like you get them.

So let me ask you this, again a question from someone on the team internally here. Is this different, the way that you’re expressing vulnerability, different because . . . Is it different for you because you’re speaking to women as a woman, speaking to another woman in a female community? Does that vulnerability create more bonding than it would for me as a guy speaking to a broader community or someone else speaking only to men?

Stephanie: I believe so. Yeah, I do. You know, we’re built different. Women and men were built differently. It’s awesome. It’s great. I don’t think that makes us better business owners or worse business owners, but we are more collaborative, more relationship-based.

Andrew: I see.

Stephanie: We like to do things together, and when I started Chic CEO I had those moments of “Who the hell do I think I am doing something like this, telling people how to start a business?” And I’ve never claimed to be a business expert by any means. I will find you the answer. That’s what I claim to do. I will research something until I find out what needs to be done in order to get you to success. So that was my value. That was what I’m bringing to my community and I sometimes have to call my friends in the beginning stages and remind me why I was doing this, remind me why I was valuable.

So in learning from another woman that is just as scared about starting up, feeling like a fraud, about the fraud police, and feeling like we don’t know what we’re doing. So we’ve all been there. We all have to go through it, and there’s a way out of it, and if we don’t be honest about these struggles and these challenges where we’re doing ourselves a disservice. And I think I’m doing my community a disservice by pretending that that didn’t happen. You know, we don’t talk about the struggles very often, the challenges that we go through emotionally in entrepreneurship and I don’t want anybody in that community to feel like just because they’re scared or they don’t feel like they know what they’re doing or they’re not sure of the next step that they don’t have value to bring to the world. Because they do. So . . .

Andrew: I see.

Stephanie: . . . you know, in being honest with everyone . . .

Andrew: If you were talking about a broader community that the person listening to us is trying to create, maybe the “me, too” is not a point of vulnerability. But we should still, it sounds like you’re saying, look for places and statements and experiences to share that will make people say, “Yeah, me, too, I am like that guy.” Yes, me, too, I want what he is expressing.” “Yes, me, too, I struggled like him.”

Stephanie: Yeah, yeah.

Andrew: Okay.

Stephanie: Definitely. So it doesn’t have to be about being vulnerable. That works but it’s finding the connection, being able to say, “Me, too,” is hugely powerful with your target market.

Andrew: And I still have this up on my right screen here. I wonder if the same thing works there, that if people will look at that and say, “Yes, you know what? Me, too, I also didn’t like the way that my milk box looked on the table. And yes, me, too, I also needed something other than a glass pitcher for milk because I also need to know when the milk goes bad. Yes, me, too.”

Stephanie: Mm-hmm, or, “Yes, me, too. I can be an inventor.”

Andrew: I see.

Stephanie: “Yes, me, too. I can win something with GE,” you know. “Yes, me, too, I can put out an idea just like anybody else.” So it’s a really great way to create a connection.

Andrew: Okay, all right. Let’s go on to the final point here, which is to use the Five Whys Technique. You did it. Let me bring up one example of how you did it. And obviously, we don’t expect people to read every word on here.

Stephanie: [laughs]

Andrew: But maybe you could describe what you’re doing here with this whiteboard.

Stephanie: Sure, so our Chic Siren Program was our very first membership program, and not like I said before. It was just templates and downloads and it really morphed into what we’re doing now with the Chic Elite Program.

Andrew: Mm-hmm.

Stephanie: And it came out of people getting too much information, having everything at their fingertips and not having the time to sort through it. It was way too overwhelming. And we kept getting the same questions asked over and over again but we’d already answered them within the program. So instead of shouting at our customers and saying, “Why don’t you just read what we’ve already done for you?” I tried to figure out why that wasn’t happening. So we went through the Five Whys.

“Why are you asking us questions that we’ve already answered?” “Well, because it’s too overwhelming.” “Why?” “Because all the information’s there at once and we don’t want to dig through it?” “So why don’t they want to dig through it?” “Well, it’s going to save them time if they just reach out and ask.” So we went through this . . .

Andrew: Mm-hmm.

Stephanie: . . . asking why five times, and what came out of it was building them a program that wasn’t overwhelming that we could dig into one topic a month and they could really deep-dive into that rather than go horizontal. So it was more about going vertical in a topic rather than giving them the broad sense of everything that we had to offer.

And it’s been a way more successful program and it’s been way more valuable to our community. So I think if you’re having a struggle or really trying to understand something about your target market, I think asking five times why you’ll get to the deeper issue and hopefully come out with something that’s more valuable to them. It’s been very helpful for us.

Andrew: You know what? I really like this example. Let me read through it just to let it sink in. Here’s how you used it. The problem was your members weren’t using one of the programs you created for them so the first question you asked was, “Why are users asking us questions we’ve already answered and that are already available in their membership?” And the answer was,

“Well, because they don’t read the information we provided.” “Why don’t they read the information we provided?” “Because they’re too overwhelmed by the amount of information in the program.” “Why?” “Because they are way too busy to sort through info and don’t know where to start.” “Why?” “Because they’re too busy and would rather reach out to us and just save themselves some time by emailing us or contacting us.” “Why?” “Because they want to implement tactics quickly that make an impact.” Got it. And so you created this program that was easier and faster for them to get access.

Stephanie: Right.

Andrew: Access to. Is Erin a PMS, one of your members, or what’s your connection to her, PMS.com?

Stephanie: Yeah, so Erin at PMS.com. She’s awesome. She’s a friend of mine. She’s up in Orange County.

Andrew: Mm-hmm.

Stephanie: And we got connected through . . .

Andrew: This is her saying?

Stephanie: Yeah. We got connected through a mutual friend and she was telling me about this company. So she had a friend that owned PMS.com. He had a project management system company.

Andrew: Mm-hmm.

Stephanie: There’s Erin right there. And she told her friend, she said, “You can’t have PMS.com for a project management company so he ended up selling her the domain name. Now she has a… this is tampon delivery service. Like a dollar shape club for tampons.

Andrew: There it is.

Stephanie: Brilliant idea. She really went through the why.

Andrew: How?

Stephanie: She started noticing that her customers were dropping off in month four. Within these packages, you were getting tampons, you were getting aspirin, and you were getting towelettes. She started noticing this trend, and again, don’t assume you know exactly what they want. She smiled and dialed every single person that canceled their subscription to find out why. What came out of it was they were just stockpiling the aspirin and the towelettes, and they just needed the tampon so all they wanted was an add- on.

It was such a small, small change, but allows them to remain her customers. Whereas in the subscription model, you have to go out nine to twelve months in order to see a return, really, in that month four. That’s really scary if they drop out. She really went through. Started asking why, why, why, why why, and came up with this one tiny solution that really changed her business. I really love that she went through that because it really made a difference.

Andrew: Whereas if she would do what someone else might do which is to call customers and say, why did you cancel? The answer to the first question might be, I really have too much or I don’t need it anymore. Until you dig in you don’t understand they have too much of the towelettes and the aspirin. They don’t have too much of the whole package. We just need to reconfigure. I see. What a great example and what a great website, too.

Stephanie: Yeah.

Andrew: All right. If people want to follow up with you the best place for them to go, I’m assuming, is Chic CEO, but when they’re on here is there something that you suggest they take a look at first?

Stephanie: We have a 3-Day Chic’s Start, which is really fun. It’s three day of homework writing to your inbox.

Andrew: Wait. You’re telling me that the first thing you want the to-do is do some work. [laughter]

Stephanie: They’re there to work.

Andrew: All right. All right. Where do we click on the site in order to get this?

Stephanie: It’s right up in the top Nav,3-day Chic Start.

Andrew: Right at the very top, next to home. This is where you want people to get started.

Stephanie: Yeah. It’s a great program. We give you a business plan template. Naming your company. Things like that. Really fun things to get started. That’s a great way to get introduced to Chic CEO, to the offerings that we have. If you want a little bit more, if you really want to deep- dive our Chic Elite program is awesome. It’s $49 a month, and we really dig in deep. Our topic is elite scraping training, which we go through how we went from zero to fifty thousand subscribers with a zero marketing budget. The next one is how to build your list and how throw events. It’s a really fun program.

If you want a little bit more the Chic Elite program is great. Otherwise, everything else on the site is free for anybody to use, really easy to get started, and we’re here to support any entrepreneur that really wants to start following their business dream.

Andrew: All right. Thank you for doing this. Thank you all for being a part. If you got any value, find a way to say thank you directly to Stephanie. Frankly, if all of it wasn’t…if it’s all overwhelming to use it all, do what I found top entrepreneurs do. They use what they can and leave the rest behind. Your goal isn’t to try to use every single thing that you’ve heard in this program and every other [??]program and every other thing that you read online, it’s to say, you know what, I’ve been exposed to a bunch of ideas here, here’s the summary of them, what’s one thing that I can use and implement right now?

Forget about the things that I can’t. What’s the one thing I can implement and use right away? I’ll start with that then I will continue and continue and continue. When you do that, let me and or Stephanie know because we’re rooting for you. We’re hoping you do really well and we’re appreciative that you’ve been a part of this program. Thank you all for being a part of it. Check out Stephanie’s website Chicceo.com. Bye everyone.

Master Class Toolbox

Transcript

Andrew: This session is about how to turn ideas into profitable products. It’s led by Tamara Monosoff, she is the creator of TP Saver which keeps kids from unspooling toilet paper and making a mess. She’s also the founder of Mom Invented which provides mentoring and training for product entrepreneurs. She is also the author of this book, The Mom Inventors Handbook, there it is right there up on the screen. And if you like you can connect with her on her site which is tamaromonosoff.com where she does business mentoring. So good to have you on here, thanks.Tamara: Thanks so much for having me.Andrew: We talked before you started about how you made mistakes in the past. Spent money on … well you tell me, where did you spend money that was so painful?Tamara: Well, when I first started out I had no road map to follow. There weren’t any books that walked me through the steps. I was searching everywhere. And I started with yellow pages and I was searching for a prototype developer. And I ended up finding a machine shop, and putting a website together was not easy at that time. We have so many wonderful tools available today that didn’t exist either.

Andrew: What did you spend on a site?

Tamara: I spent $25,000 and I didn’t just have $25,000 in the bank, I mean I was scrapping it together. And not only that I mean, I was in payment plans that was really tough. And that was for a simple five page website if you can believe that, and my logo of design and I mean that was it.

Andrew: What about patents?

Tamara: What’s that?

Andrew: What about patents?

Tamara: Patents again, about $5,000 for the first patent. And I talk a lot about patents today because I think that they’re a useful tools potential, but they may not be necessary at all. So know you can dive into that when you want to.

Andrew: Absolutely, and especially important when we’re talking about physical products. After doing it all right, what were you able to create? In fact here, let me show it on the screen, as you could describe this. How did you do this in comparison?

Tamara: So in comparison, that’s called Puzzle Bites and there’s a whole long line of sandwich cutters, called Good Bites Crustless Sandwich Cutters. And how I did that differently was I was able to … I knew the ropes now in manufacturing and I also was able to just reach out to retail stores and catalogs. And catalogs are those hidden jewels that cannot be over looked, because one email resulted in a $100,000 order, incredible. And then also reaching out to the large retail stores I was able to get orders of $25,000 a week.

You can imagine it was both a fabulous thing and a scary thing too. Because suddenly production cost went up as I was having to stay ahead of the game. So you know it’s a really good problem to have, but it’s also something to think about in terms of growth.

Andrew: All right, let’s talk a little bit about how to do this. I pulled out and my team has pulled some ideas from the book. And the first one is to start out by writing a sales goal and there’s a specific way that you’d like us to do it. Write a goal and do something else … here let me bring it up on the screen. Why should we start with the sales goal?

Tamara: Because otherwise everything’s up in the air and also many times people have unrealistic goals. I can’t tell you how many times entrepreneurs have come to me and said, ”I want to sell a million units by Christmas.” And they haven’t’ even hit the market yet, it’s only four months out.

So I really like to set goals that are attainable and realistic, not only so you can see how far you’ve come, but so that you can have these little moments of achievement to keep your energy up and continue going forward. So five units, I’m going to sell five units online. I’m going to call five retail stores and I’m going to get my products into the retail stores, locally first. And then test it out there before I go after the national stores and the catalogs.

So it’s really important and also to put dates on there. So what’s the activity you’re going to do? And what’s the date to accomplish it? And then that why you’re going to see results much more affectively.

Andrew: So we like to think big as entrepreneurs. You’re suggesting we start off with more attainable goals first, and also write a list of activities we’re going to take to get to those goals and put dates next to them. So it’s not sell a million, but you’re talking about sell a handful of units, five units.

Tamara: That’s right and also don’t be hard on yourself if don’t achieve your goal it’s okay, just reframe it, reset your goal and go for it again. I like things as entrepreneurs we are often hard on ourselves and that doesn’t achieve anything so just redefine your goal and then go for it again.

Andrew: Okay, all right, let’s go onto the next idea that we’re going to be talking about which is to figure out if your product is niche or mass market. I talked earlier about the product that you created. It solves this problem that we’re looking up on the screen, the TP Saver. Let’s zoom it in. There we go.

There is the problem. A kid is unspooling a roll of toilet paper. So how do you know? Is this niche or is it mass market?

Tamara: Well, like most entrepreneurs, I started out with visions of selling in the mass market. I didn’t understand that not everybody experiences this problem and if people do experience the problem, is it worth it to them to pay for a product to prevent it? So you can see that I had this big vision and then as it turns out, it’s a very niche item. Now, you can still be successful with niche items, but you need to identify what that niche is. Where is that market? And then you can hone in on that market rather than thinking broadly and wasting tons of time going after markets that really make no sense for your product.

Andrew: Okay, so we figure out, all right, this obviously is meant for parents. Actually how did you know it’s meant for parents with kids as opposed to maybe families with cats or as opposed to someone who’s . . . How do you know who just has toilet paper that happens to unspool because of the way it’s laying on the roll?

Tamara: That’s actually a great question. I learned from reaching out and talking with people that cats do it all the time. So we did create a pet version.

Andrew: Okay.

Tamara: And then also I learned interesting things like RVs when they travel across the country the toilet paper unspools.

Andrew: Ah, yes!

Andrew: So it was like, oh, my gosh! You’ll find that once you start getting yourself out there that things will come up and markets will come up that you never first even realized.

Andrew: So what I found is for me, I like to think about who is the smallest group of people that I can really focus on and I’m just going to make it really good for them, and only concentrate on them, and forget everyone else. But when I talk about that other entrepreneurs or other people frankly on the Mixergy team will say, “Broaden it out, but it could also be used for this and it could also be used for that.” It could also be used for, in your case, RVs and cats. What about dogs? What about annoying neighbors? What about in schools where kids like to screw around? So should we allow ourselves to go broader or are you recommending narrowing down at first?

Tamara: It all comes to one word and that’s focus. And we as entrepreneurs have so many great ideas and often times want to go after them, and I am at fault for that too because I get excited about new possibilities.

Andrew: Yeah.

Tamara: But what I’ve learned over this last decade is that it pays off to focus. So to bring it in even though you have all these other fantastic distractions and opportunities really, to focus in on your core market first. And then as you start to sell successfully think, okay, which is the next one that makes sense not trying to reach everything at once.

Andrew: What’s an advantage that you are able to get by focusing on families with this issue as opposed to going broader from the start and saying it will also work with RVs and pets, and so on. Do you have a specific example of a benefit that you got by focusing on this problem?

Tamara: Well, it was new to the market. There was nothing else like it at the time and so that’s why it made sense. And plus, think about the packaging and the cost of packaging. I would have had to repackage it for the RVs. I did eventually branch out to the pet market, but that was after focusing here on the baby market because at that time those were the trade shows. You have to pick and choose. It costs money to attend trade shows. It costs money to create packaging for your product. So you have to pick and choose which market makes the most sense first.

Andrew: Okay.

Tamara: And then you can branch out later. But really that’s why I focused on the kid market first.

Andrew: All right, I was going to go onto the next idea which is actually something that we . . . I don’t think anyone else has talked about on Mixergy and it’s important for us to talk about, but first what about patents? Now you have this idea. You know who you’re targeting it towards, are you saying that we shouldn’t bother with patents when we have a product like this?

Tamara: I think you should always get information such as speak to attorney about what’s possible, okay, and to have that knowledge and information. It’s important to know what aspects of your product are patentable, but what I have had happen year after year is my patents once I’m successful with a product on the market other companies want part of that market share and they figured out how to design around the patent anyway.

Andrew: I see.

Tamara: So as a struggling entrepreneur or at the very beginning stages, do you want to spend that $5,000 on the patent or do you want to spend $5,000 on just being super aggressive at getting your product out there as hard and fast as possible and getting, you know, all this excitement and interest around your product. So again, I’m not saying don’t get a patent. It can be a useful tool if you got something about the product that is patent-able that could prevent others from creating a similar type product.

However, it’s not necessarily essential and people make the mistake of thinking that’s the first step. It is absolutely no the first step. The first is making sure that you have a market you know who they are and you’ve got make sure people want your product first before you spend a lot of money developing it and bringing it to market.

Andrew: Okay. And speaking of knowing if people want your product first, this is an idea that you suggest for figuring that out. Sell and consignment in local stores. Why consignment? Why local stores?

Tamara: This excites me actually because oftentimes the local stores are entrepreneurs themselves. They’ve got the small business owner right there and they are more likely, if you walk in and say, “Hi I live in the community and I have this product and I think it would be perfect for your store. Would you be willing to test it out?” And they’re like, “Oh, I’m not sure.” Would you be willing to test out twelve units or six units even and say, “If it sells successfully then will you be willing to reorder it from me?” This is such a great way to get your foot in the door.

Andrew: I see.

Tamara: And they have no risk. So they’re not having to pay you anything and so it’s really a win, win.

Andrew: And because it’s on consignment, no risk they only pay you after they sell and it’s local so you get to get some feedback from them and hopefully you get some hometown advantage because they get to see you in the store.

Tamara: Exactly.

Andrew: You give an example on your site of this woman who did that.

Tamara: Right. She did that and that was how, she was having trouble getting people. That’s a Snickey[SP] and it goes around your neck and it keeps you warm and she was having trouble getting stores to accept her product and that’s exactly what she did. She put it on consignment all over in her local town in different stores and that’s when it started to sell and she able to then, really launch her business.

Andrew: There it is. It’s kind of like a smaller scarf that you can easily take off not as bulky and that’s how she was able to get some feedback and early sales of her product by taking in to local consignment shops. Alright, you also talked about pitching. The WOW factor, let’s bring that up right there. And one example you talk about is this one. What is this? What are we looking at?

Tamara: So this is the, do you see the booster seat that that child is sitting at?

Andrew: Yeah.

Tamara: Kids cannot reach the kitchen table. Also, times when you go to restaurants there isn’t a booster seat available or they’re all covered in food and sticky. And so this way you can bring your own. And this she makes it with a material, it’s called love chicken, and you can wipe it off and it’s stylish and fun and the kids love it. And this is one of my menties[SP] from my power mentoring program and why this excites me is we were talking about that she was feeling stalled in her sales so we talked about what had she already achieved that was amazing.

Now it may be that you haven’t achieved anything yet because you haven’t had any sales yet, but these are the things to start thinking about. So she was saying, ‘Well I sold, in three hours, I sold 300 units.’ And said, “Wow, that’s great!” And it was on one of the websites that has the daily deal websites, we can talk more about that as well. And I said, “That is a WOW factor.” And then she said, “Well and Gwyneth Paltrow tweeted about my product.” I said, “What? That’s a WOW factor. Okay. This is what we need to put into the subject heading to entice buyers to click.”

Now before she sent it I said, “You need to have a product video so that when the buyer saw in the subject heading “Gwyneth Paltrow Raves About Love Chicken” and sold 300 units in three hours. Then you go in and there’s a video demonstrating your product. She got a buyer, she got a meeting immediately with a mass retail buyer and now she’s going to be going into this mass chain nationwide by this December.

Andrew: I see, wow, and so just because she saw a tweet which many of us would write-off and seems like she just was excited about it but didn’t see the significance of it, you found that as a WOW factor and featured and highlighted it in the headline.

Tamara: Right. And that’s what you need to do. You need to think about when you’re writing emails, a lot of time entrepreneurs explain way too much. The emails go on, and on, and on. You need to think about it from the buyers prospective. They need something fast, they’re looking for products, they want, they have to. They have to keep bringing things into store but they need to get the information in almost like sound bites. Quick, fast, what’s the wow factor? What’s the significance? How is this product going to sell in my store? And then the demonstration of the video makes all the difference. And by the way, let me just say, keep the video under two minutes.

Andrew: Under two minutes for the video. What about how you get to the buyers. Wasn’t your book, didn’t the forward come from a buyer at Sam’s Club?

Tamara: Yes.

Andrew: Director of showcase events, Sam’s Club. So you’re connected to them, but how does someone who’s watching us who says, “You know what? I don’t want these one offs of sales on my own website. I’d like to be sold by Sam’s Club and some of the major retailer.” How do they even connect with the buyers who they could then pitch the wow factor to, etc?

Tamara: What’s interesting, that forward was written by Julie Allen Martin and she is the head of the showcase events which is their local purchase program. What’s interesting in speaking with Julie is she says they are looking. They are hungry for products. They are thrilled to work with entrepreneurs. See most people don’t realize that. They think, “How am I going to get into that big store?”

Well one of the key ways is Sam’s Club, Whole Foods, Walmart, they have these local purchase programs and you just need to go onto their website and search local purchase program. In this case was Sam’s Club Showcase Events. And then see when you can participate in one of their programs. In one of their events.

Andrew: I see. Local purchase programs. I had a Mixergy fan who sold to Whole Foods. I couldn’t believe it because he was brand new. He told me about this too. That the local Whole Foods is encouraged to buy from local entrepreneurs. And because he knew it and pitched to them he was able to get into Whole Foods. Once you prove yourself there, you can expand and expand. So that’ it. And is it every company or many companies that have this? Or is it a small isolated group of companies like the ones that we’ve talked about right now?

Tamara: It seems to be the big stores are creating these programs because they need to keep pulling things in for their customers to keep them happy. I’ve heard the same stories over and over about Whole Foods. Also Walmart is interesting because they do give their regional managers the power to test things out locally. A lot of people don’t know that. And if it does sell successfully, then they’re the ones, the regional manager then takes it to the corporate office.

Andrew: I didn’t realize that.

Tamara: So it’s much better to have the regional manager take it than you trying to figure out how to get in.

Andrew: Alright. Onto the next big idea. You kind of talked about this earlier. Which is test different marketing tools, different sales channels. A lot of people have written this company off. Let me bring it up on my website. Where is it? There it is. But you still like it as a sales channel. Groupon.

Tamara: You have to test things out. I don’t know if Groupon is going to work for you or not. In fact, I was just looking into Groupon because I want to test that one out personally. But I’ve had other people have success on Groupon. I had an inventor who’s featured in this book actually. She has a product called the Kiddie Catch All. She just sold 750 units on kidSTEALS.com just last week.

Andrew: On what website?

Tamara: kidSTEALS.com

Andrew: Kidsdeals.com. Okay.

Tamara: It’s kid steals, with an s.

Andrew: Oh, okay.

Tamara: She sold 750 units within 72 hours. Think about that. If she was normally selling one at a time on here website. She was so excited she couldn’t contain herself. She emailed me immediately. She was like, “I can’t believe it.” So this is the daily deal websites are real. In fact, Amazon even has a new one and it’s called Woot. W-O-O-T. I just learned about that. Maybe you know more about that than I do. I just learned about Woot. We’ve got Gilt.com. What do we have?

Andrew: There are tons of them. You know what? I’ve heard of Woot, I’ve heard of Groupon, of course. I never heard of this site that you were just talking about a moment ago. KidSTEALS.com. I kind of thought that all these deal sites were done. You’re saying no and they’re not just not done, they’re sending a ton of traffic.

Tamara: They are. My products have sold extremely well on Zulily.com. Which is Z-U-L-I-L-Y.

Andrew: Z-U-L-I-L-Y dot com. Wow.

Tamara: Multiple times I’ve had my products on Zulily. So these are real and it’s worth looking into. Especially because of the volume in terms of sales. But also it goes beyond the sales. It’s marketing. Marketing costs. Think about their email list. I mean, if they’re getting you 750 sales, think about how many people they’re sending these messages out to and it’s repeatedly over the week they’re pounding their list with your product with a picture. So even if they don’t buy it right away, they’ve seen it. It’s an incredible marketing tool.

Andrew: And then they buy afterwards. I’m a big fan of AppSumo. AppSumo is geared toward start-ups. And I’ve seen many entrepreneur’s products on there do well and then they come back and they tell me, “You know what? People still came over to the website and bought directly from us instead of going through AppSumo. You’re talking about sales that come directly from these sites, but also residual sales afterwards from people who decided not to buy directly from the sites.

Tamara: That’s right.

Andrew: All right. I like that. That’s a direction a lot of people have forgotten about. What about this? How do you get to this? This is a huge channel. We’re talking about the major networks. We like to put them down as online interviewers and podcasters. But there’s still a lot of pull when you’re talking about a site like this.

Tamara: So you see George in that picture.

Andrew: George Stephanopoulos, yeah.

Tamara: George Stephanopoulos is holding one of my products. That product is called Tinkle Targets.

Andrew: Okay.

Tamara: You put it into the toilet and it helps teach boys how to aim.

Andrew: Oh, great.

Tamara: This is, by the way, if you’ve got something funny about your product, the news loves it because it makes for fun TV.

Andrew: Okay.

Tamara: This is the thing. You can connect with people, like this I went through Tory Johnson on Twitter. You can connect on LinkedIn. You’ll see in the sales chapter of The Mom Inventor’s Handbook that some of the inventors found, in fact one of them in particular hooked up with buyers on LinkedIn and got her products distributed in FAO Schwarz and in many stores nationwide. It was huge and it was by reaching out to buyers on LinkedIn.

And in that case in that photo that you just saw, that was by reaching out to Tory Johnson which you can do on Twitter. So the host of the TV shows, they’re there. They want stories. So definitely get onto Twitter and Facebook. I have found most success with Twitter because it’s fast and I find that it’s a really easy way to connect with…

Andrew: You know what? Let’s jump to that section here and we’ll come in and refill and cover the previous sections. You do recommend using social media to reach the big guys. We have an example of how you did it right here. Is it as simple as this? This is from October 6th. You’re just tweeting at someone from KTLA, right? The television station in LA.

Tamara: Yes.

Andrew: This is how you build connections? From a simple tweet like this?

Tamara: Yes. Yes. So that’s Gail Anderson and I’ve been on that show about five, six times with my products, with my books. I was giving her a heads up that my book was coming out. It is that simple. And you can find them by just searching on Twitter and they’re there. She’s tweeting on there all the time and it is a fantastic was to connect with people. You know, you used to feel like TV was so removed…

Andrew: Yeah.

Tamara: …and it’s not. And it’s easier than you think. Also getting into magazines. One of the things that you can do is you can use editorial calendars. This is something that’s often times overlooked. What you do is you go to a magazine’s website and you go to the advertising tab. If you can’t find it there, go to the corporate tab, then the advertising tab.

They have set it up for advertisers who are going to purchase ads for the magazine, but they have to give those people who want to put ads in the magazine an editorial calendar for the year ahead. You then look at the year ahead and there’s a theme in each month. Figure out which month makes sense for your product. Where will it fit in? Is it an organizing type product? That will fit into “With a Clean, Fresh Start in January.” So figure out where it is that yours fits in. Then often times the editor’s names are right there and you can reach out to them to pitch your products.

Andrew: I hadn’t thought of that. That’s great. By the way, is this your product right here? This is on Walmart’s website.

Tamara: Yes.

Andrew: The one that got on ABC News?

Tamara: Yes. That’s the one that George Stephanopoulos was holding. Yes.

Andrew: And I see it here on Amazon and a bunch of other websites. Wow. Alright. Let’s go on to the next point. The one that I skipped over a moment ago. Which is to get outside the box, think creatively, to get attention, you give this example. What is this? Let me zoom in again.

Tamara: Okay, this is, she’s one of my inventees [sp] from my power mentoring program and she has a business called Kass Covers. What she did, I just love this, talking about how to really focus and target the people that could really have an impact on your sales. So she wanted to direct her information about her product which in that case are called arms and send that to orthopedic surgeons. So she used this company called ThinkShapesmail.com. And if you see that red line around the arm, that’s actually where it’s cut. So an arm actually arrives in your mailbox. Not a postcard in a rectangle.

Andrew: Right.

Tamara: You cannot help but to look at this arm. Because you are like, “What is going on?” There’s an arm in my mail. She got an incredible response and she ended up getting put into hospital gift stores. She had an orthopedic surgeon who’s head surgeon at Stanford University end up coming on an endorsing her product. It was incredible. So it is worth it. Now I sent out postcards when I first started out. I didn’t get any response because, hello, I was sending it out to everyone. Lesson learned. Don’t do that. Think about what she just did. She focused in.

She said, “Okay, I want orthopedic surgeons to be talking about my products. Telling their patients and telling the kids, “Hey, would you like a cast cover because it’s going to take away some of the pain?” Right? They’ve just broken their limb and now they can put something fun on their arm. And it also creates a lot of conversation because kids can then say, “What do you have on your cast?” So there’s a lot that goes on and it’s absolutely a fantastic tool to use if you focus on the right target.

Andrew: By the way, you mentioned that she’s someone who you’ve mentored. Where do I find information about that on your site here. Is it mentoring classes here? Is it somewhere else?

Tamara: Yes. So if you see that pink Power Mentoring on my shoulder and it says click here for Power Mentoring…

Andrew: Right. This Power Mentoring over your shoulder. This is what we’re talking about.

Tamara: That’s right. And there’s a video there and then there’s all the testimonials. My students, you’ll see, they’re are incredible. What they said…

Andrew: And we join on the right side if we want to be a part of it.

Tamara: That’s right.

Andrew: Okay. Is this just for moms, for women? Or is it for everyone?

Tamara: That’s why I created Tomorrow [??].com because I wanted everyone, men, women, moms, anyone who has a product idea and they want to know what to do with that idea. And they want to generate income from it. I wanted to create this website that was full of mentoring and resources and tools to help people succeed faster.

Andrew: I see. As opposed to the other site which is meant just for moms, Mom Invented.

Tamara: Right. And they’re mostly stories, great inspirational stories and tidbits. But the other on is really about, okay, let’s buckle down, let’s take the classes, let’s get to work and get your product out there.

Andrew: Okay. We have two more points that I want to talk about. The first one, I want to ask you a little bit more about, you recommend using QR codes to link to video testimonials. Of course they are like this. I’m looking through your book right now and I can see, that zoomed in a little too much. But here, I go through your book, can I show it here? Does it show up there?

Tamara: It does.

Andrew: In the book you use the QR codes. You’re a big fan of QR codes. Maybe it’s because I’m on an iPhone, let’s fix the camera, there it goes. I don’t use QR codes much. I had to install a separate app that happens to have it in there. Have you found success? What have you found with that?

Tamara: I wanted to make this book interactive. I wanted the stories of the 50 entrepreneurs who are featured to not just be written words, but I wanted them to come to life. I wanted you to read something about them and then get your phone and scan their code and have that entrepreneur pop up onto this screen and say what challenges that they’ve had to overcome. The struggles.

What has surprised them the most about starting their business? And advice that they have for aspiring entrepreneurs. And some of them are really heartfelt stories. Some of them have really sound advice. I wanted this book to be truly interactive. And the response has been phenomenal. This book has hit number one in six business categories two weeks in a row.

Andrew: We’re talking about this book right here. There it is.

Tamara: Yes. And it’s partly because it comes to life and then it’s useful. The one you pointed out was my QR code. So every time you see my QR code then that’s me introducing what you’re going learn in that chapter.

Andrew: All right. Let me take a step away from QR codes for a moment and just notice that you’re good about getting testimonials. It’s video testimonials. How do you get video testimonials that are useful?

Tamara: You ask.

Andrew: Okay. I’ve asked and you know what happens? People start to rave and it’s very flattering, but it’s an empty rave. It’s just, “My life is so much better because of Mixergy.” It is fantastic. I love the site. I recommend it to everyone and it goes on for three or our minutes. Heartfelt, really sincere, but an audience in not going to be eager to listen to that because it’s not useful for them. How do you get testimonials in a way that are structured and useful?

Tamara: In terms of the videos and the book, I put four questions down. I said, “I want you to be honest, please.” And share because people really want to know what you struggled with.

Andrew: Okay.

Tamara: I said, “I want to know what surprised you the most about going into business?” And I asked them about giving advice. I was very specific about what I was looking for. I wasn’t looking for praise for myself. I wanted their story to come to life. In terms of the Power Mentoring Program, mostly those are hand written testimonials. I just say, “What did you get from being a part of this class?”

Andrew: So asking more directive questions as opposed to, “Look, speak from the heart. Say what you want. I don’t want to guide you.” You recommend being more specific. Asking questions that will lead to answers that are more useful.

Tamara: I do because I want who they are to come across. It’s not about me. It’s about them. So what did they get?

Andrew: What is the most useful question we can ask if we want to get a testimonial that is useful? Sorry to interrupt.

Tamara: What’s a question you could ask?

Andrew: Yeah. What’s the most useful question. If we were going to ask for a testimonial, what’s the most useful question we could ask to get a useful testimonial?

Tamara: Well, it depends. If it’s a product, like something you’re selling in a store. How have you used this? Or how has this changed the way you do things? Or how has this changed your life?

Andrew: I see.

Tamara: That would be a product. You know, has it made your life easier? You don’t want to say yes or no, but you want to say how has this changed your life? Because that’s a bigger open ended question. In terms of my classes, I say, “What has transpired for you? What has changed since when you first started this class until now?” And really I want to know. I really want to know. Not only for other people. I really want to hear what has this been for them. What’s their experience?

Andrew: Okay. Onto the final point that we’ve got up here, which is to practice your pitch. You did that when you were on the Today Show. How do you practice properly? To do it right.

Tamara: Yes. That was about four weeks ago when the book launched. That was an interesting experience because it was very short and I had a bunch of products that they wanted me to show and tell. I was there to talk about the book because I wanted people to know about the book.

Andrew: I see. They wanted to talk about the product, you wanted to make sure to talk about the book because it was just coming out. The new version of it.

Tamara: It was launching that week.

Andrew: Okay. And so how do you do that?

Tamara: Yes. It was hard. I worked hard. If you watch that video you’ll see, but luckily it came across okay. There is a fine dance because you want to be respectful of your host and at the same time you need to make sure that you’re getting your points across. Otherwise the TV segment is of no value for you. So I practice. I tell my students in the Power Mentoring classes I still practice.

So before I went to the Today Show, the evening before and the morning of, I looked and thought about the bullets. The things that I needed to get across. And I said them over and over again on my way to the green room. I practice. I say it out loud in the hotel room before I go. People are like, “Oh, you’re so natural on TV.” And I’m like, “No, I’m not. I practice.”

Andrew: Do you remember one of the bullet points that you made sure to include?

Tamara: What’s that?

Andrew: Do you remember one of the bullet points that you practiced?

Tamara: I practiced that there is an abundance of opportunities today with getting funding for your business. And then I listed. There’s crowd funding, micro lending, and I went on. That’s what I’m saying. You have to think, what are the four points. Funding was one of them because I know that that’s a pain point for a lot of entrepreneurs. I also talked about sales. That there are opportunities today in sales that didn’t exist before. Catalogs, Daily Deal websites, local purchase programs.

Andrew: Got you. So you don’t have to think of it on the spot. You knew your answers because you thought ahead. You know what? I found when I started doing interviews, we’re now over a thousand interviews on the site. When I started and I was in the dozens, I noticed that there were some people who were really good and some who were not so good. What separated them was the practice, the forethought. I would see people who especially good afterwards and they showed me the notes that they made in preparation. I was so frustrated that not everyone would it.

In fact, most people obviously wouldn’t. That I then hired a pre- interviewer. I actually started doing pre-interviews myself. Then I hired a pre-interviewer to make sure the people were trained. You’re saying that if there isn’t that pre-interview process, and often there isn’t, we have to do it ourselves. And the way to do it is by writing out the points that we want to make. And the other thing that you do that’s especially good is you transition from what they want to talk about to what you want to talk about and make it useful for them. How do you make that transition? That’s a challenge that I still see entrepreneurs on Mixergy have.

Tamara: Right. Well, you have to be respectful and quickly answer what they’re asking, but then just leap. And I’ll say things like, “I’m so glad you asked that because”, and then jump right into whatever it is that I want to talk about. And it just takes practice doing that. You see politicians doing that all the time where they answer the question then they switch to what they want to talk about. It’s really the same skill, but it’s really important because what I learned when I first started is I got on TV a lot when I first launched because there was nothing . . . The whole focus on mom entrepreneurship didn’t exist so that interested the media.

What I didn’t know when I started out is I used to just let the host lead everything and then I would leave and I would gain nothing from the segment. There are no . . . people were not going back to my website because I neglected to mention it because the host didn’t ask me and I didn’t want to be rude and say it.

Andrew: You know what? I have that challenge too. Because I do so many interviews, a lot of entrepreneurs online, a lot of websites want to interview me, I will sit there and do the interview for an hour because I want to help out and I want to learn how to present my ideas better, and at the end I’ll feel like I helped them. Yes, I did get better presenting my ideas, but there is no connection with the audience afterwards and I feel a little bit smarmy pushing an agenda, pushing a website.

I don’t want to do it in a way that doesn’t feel right. I want to do it well. And I think if I do it well the audience will benefit because they’ll get to connect with me if they like what I had to say in the interview. The host will be happy because they want me to do well. They don’t just want to use me, they want to help me back and I’ll do well. I just don’t know how to transition it from someone who asks me about, in my case, how I started a business to a site that I want to direct the person to so that I can connect with them, get their email address or somehow introduce them to my work. What is a good way to transition?

Tamara: It is really a difficult choice and I don’t always say my website. I was interviewed in New York on three television segments last week and I chose not to say my website because I felt like it wasn’t right.

Andrew: Okay.

Tamara: And so you just have to really . . . It’s a delicate dance. And when the host says, “Where can people find you?” That’s when you just jump in.

Andrew: That’s when you need to be prepared.

Tamara: And say your website. Okay? But I didn’t have that opportunity. I could have pushed it and said it, but I didn’t want to be s- . . .

Andrew: What about pushing towards the book?

Tamara: What’s that?

Andrew: So again, a book is a little bit easier to promote and they want you to talk about it. So if they’re asking you about a product and you want to talk about a book, what’s a bridge that you’ve used that works that we can maybe copy or learn from?

Tamara: Right, so that’s what happened on the Today Show. So what you do is you could talk about a product and then you say there are 50 entrepreneurs featured in this book who all have really interesting products and share what they have learned as they’ve brought their own . . .

Andrew: Got you, so you’re expanding from the one product that they’re talking about to many others. So it’s still relevant and now you’ve made it bigger and more relevant to your book.

Tamara: That’s right, so you’ve then gone to their focus. What happened on the Today Show is they focused on my original product, the TV Saver from ten years ago. I wanted to talk about the book.

Andrew: Yeah, I see it here.

Tamara: So they were talking about that and they were ask- . . . I didn’t want to show [??] demonstrated. I wanted to talk about the book because I’m so excited about the book. So I quickly demonstrated it. It was like a quick . . . I reduced my normal explanation into a sentence or two and then reverted straight back to the book, and about the entrepreneurs featured in the book.

Andrew: Okay, I was going to start playing it, but I think I’ll just leave it for people to watch afterwards. It is up on Today.com.

Tamara: You’ll see the delicate dancing I was doing.

Andrew: I just paused it. I’m going to watch it right afterwards on here and I hope everyone in the audience does too. If they want to follow-up with you, it seems like the best way to do it is to just go directly to your site. I’m going to go over to it right now. You can see I’ve been checking it out throughout the interview. It’s just . . . Well, actually we’re going to be linking over to it, but it’s TamaraMonosoff.com. We’ll link over to it so people can see it and what you’re suggesting they do is just click that image over your shoulder.

Tamara: That’s right and then that gives the list of the classes. Also free workshops where the rocket ship is, they launch next week. I’m really excited to be doing . . .

Andrew: Right, your bottom right.

Tamara: . . . these free weekly workshops where I’m going to be giving concrete tips and tools every week.

Andrew: All right, thank you so much for doing this. I really appreciate you coming on here and of course we’ll link to everything we’ve talked about on the page and the site is called . . . Wait, there it is. Mom entreprene-, the Mom Entrepreneur. Excuse me, the Mom Entrepreneurs . . . Wait! Why am I saying entrepreneurs because that’s what this is about and I keep thinking about that word instead of inventors. Sorry.

Tamara: Because we are entrepreneurs.

Andrew: The Mom Inventors Handbook and yes they are entrepreneurs. Thank you so much for doing this. Thank you all for being a part of it. Bye.

Master Class: How to get traffic from content(So you can generate free leads) Taught by Neil Patel of KISSmetrics

Master Class: Traffic from Content

Neil Patel is the co-founder of multiple companies including Crazy Egg, which creates stunning heat maps that help you increase your conversion, and KISSmetrics, which gives you web analytics and customer intelligence that you can understand.

Master Class Toolbox

Transcript

Andrew: This session is about how to use content to market your business; it’s led by Neil Patel. He is the co-founder of multiple companies including Crazy Egg, which creates stunning heat maps that help you increase your conversion, and KISSmetrics, which gives you web analytics and customer intelligence that you can understand. Neil blogs and teaches all aspects of growing online businesses including how to get traffic and conversions on quicksprout.com.I’ll be helping to facilitate. My name is Andrew Warner; I’m the founder of Mixergy where proven founders like my friend, Neil, teach.Neil, it’s good to have you here.Neil: Thank you for having me.

Andrew: Usually, I start off with a story from the guest, but I have to tell a quick story here, myself, of you. When I started Mixergy, you were so bothered by how much work I was putting into the site, and how I wasn’t getting traffic, and how I wasn’t doing the right things that you said, “Andrew, give me your user name and password and I’ll just do it for you.”

I couldn’t believe it. I’ve known you for a while, and I trusted you so, I couldn’t believe it but I gave you my username and password and the changes that you made are still on the site today. Which means two things: first of all, thank you for helping me get some traffic and number two, I am due for a refresh. One of the reasons why invited you here is so that I, along with the audience, can learn from you and improve and get even better.

So first, thank you and thanks for teaching.

Neil: No problem, any time.

Andrew: I always think of you as the guy who had it together since forever. That, why would you need content marketing and then I found this old photo. This screen shot. What is this site?

Neil: This site is Advantage Consulting Services. It’s my first real business. Also known as ACS. What we pretty much provided was internet marketing services like SEO, pay-per-click services, all that kind of stuff. I don’t even think social media marketing was popular at the time. The site was really ghetto, right? As you can see there, it even had music so when you’d go to the site, you would hear this grocery store music. I don’t know why we picked grocery store music but, nonetheless, that’s what was there.

We had that site, we tried to get it rankings on Google, and we were eventually able to figure out how to use [??] to get rankings. We never really got a ton of leads from that site. That business did fine, but it took us a while really to kick it off and start generating revenue.

Andrew: Okay. Today, as a result of what you are about to talk to us about, you’ve been able to help multiple companies to increase their traffic including, what’s this company here? Or what did you do for TechCrunch, I should say.

Neil: TechCrunch we ended up changing the on-page code and the on-page code ended up giving him a 30% lift in traffic in 60 days. They already had the links, they already had the social media shares, but what they didn’t have was clean code for the search engines.

Andrew: Okay. There are multiple things that you do to help companies; Search engine optimization, ad buying, actually, is ad buying one of the tools that you use? It is.

Andrew: My concern is that, if we talk about everything that will achieve nothing. We’ll all walk away feeling, “Boy this guy, Neil, is brilliant, but we’re so overwhelmed that we don’t even know where to get started.’

So we worked with you here, the Mixergy team did, to come up with a few tactics that we can focus on in this conversation. They’re all centered around creating content and using it to drive traffic and to market our businesses. Not necessarily buying ads, not necessarily doing high SEO. Just thinking about content in a smart way.

One of the first steps that you’ve told us to think about is, it’s right there up on the big board, it’s to figure out what our ideal customer wants to learn. Here’s one way that you did that. I always like specifics, let me see if I can bring this up on the screen here. It’s a pretty big screen shot. Do you recognize this?

Neil: This right here was my old click [??] traffic system. I was selling it for, I think, $97 bucks. One time or three payments of $67 or something like that. I was doing a 30-minute phone call and, actually, I sold so many of those I was on the phone forever. Never again will I start selling 30- minute phone calls.

Andrew: I remember you actually telling me that was one of the things that you did, and I thought, “Boy, Neil must be so hard up for money that he’s willing to trade his time for money.”

That’s not the direction successful entrepreneurs go in, right? You start out by trading your time for money and then you eventually create products that people buy that aren’t dependent on your time. I thought, maybe he’s running into some trouble.

What I didn’t understand was, the logic that went on behind the scenes that connects with this point that we’re talking about here, figuring out which the ideal customer wants to learn but in talking to them what did you find out about your customers.

Neil: So that was actually the main reason for the call, and when I set up the traffic system the call was actually included for free. You’ll be shocked. Not everyone took the call, and I don’t know why. I wasn’t trying to sell it. There was no upsell. I was just offering it for free. If someone is willing to pay for a product, I actually want to find out their problems and help them due to the fact that it would help me figure out what to offer next. I could have a better product. I could have better service maybe.

So what I ended up learning was my consumers or my readers had problems in three main areas, right? Number one was SEO. Number two was content marketing. Number three was social media marketing. And they broke down their specific problems. I ended up learning that most of my readers and people who bought stuff from me were actually not big corporations.

I assumed they were because I had a lot of corporate readers, but they were actually small mom and pop businesses that typically were the only person there in the company or they had no more three to five employees.

I also learned that a lot of customers were in Australia. I also learned that a lot of the customers or visitors who bought the system whether they were in Australia, Canada, or the U.S., the biggest problem they had was, “Hey, I’m a solo entrepreneur. I don’t have that much time to spend on marketing. What should I focus on most to get the biggest bang for the. . .

Andrew: Let’s see if the video will catch up with us. Sorry, so you were saying . . . The connection just broke off for a moment. You were saying they were saying, “What can I do to get the most bang for my buck?

Neil: That’s correct. So they were saying, “What can I do to get the most bang for the buck, right?

Andrew: Yep.

Neil: From a time perspective, what’s the last amount of work we can do on marketing, not because we don’t want to do marketing, but it’s because we’re already spending time running the business. We don’t have enough money to spend hiring people, so what can we do to give the most amount of sales with spending the least amount of time. And a lot of that ended up being content marketing because it produces the highest ROI for the long run, right? In the short run it’s a slow run, but in the long run it’s a very profitable marketing channel.

Andrew: I see. So what you’re advising us to do is bigger picture, figure out what my ideal customer wants, not necessarily use this specific tactic of having customers call us, right?

Neil: That’s correct.

Andrew: But if you are having customers call us . . . I like to steal your ideas, and so if I were to say, “All my customers should call me” how do I understand what they’re looking for and not just have a chat with them. I’m assuming if they me call up or they call our viewers today that the customer is going to have a real problem that needs to be solved maybe in the next half hour, and that seems like a high burden for an entrepreneur to get on the phone with every customer and to potentially solve their problems within a 30 or so minute phone call.

Neil: It is. And I don’t recommend it for most people what I end up doing because I really want to know my readers. That quick and simple way to do it is actually service through Qualaroo, right? You can actually ask questions within your site within your users, and you can figure out what issues they are running into, and you can help them solve it.

Andrew: Okay. So phone calls one way, Qualaroo a company that you co- founded also and since sold.

Neil: I’m sorry. I don’t own it any more though.

Andrew: You sold it?

Neil: I use Survey Monkey which is another good tool right now. You probably know about it. You have a big list. Just email them.

Andrew: Big list, you email them? What’s one other way to understand what your ideal customer wants to learn?

Neil: So another way is actually analytics. So if you work with Qualaroo which is free but qualitative and quantitative data. Qualitative is feedback like Survey Monkey and Qualaroo. Quantitative is the numbers in your Google Analytics. So if you notice that all of your people on your site . . .

Let’s say I’m selling services, social media SEO content marketing. If I’m making visitors go to the content marketing page and spend the most time on there, and that’s where most of my leads are coming for, right?

Whether they say they’re interested in content marketing or not, the quantitative data is showing that visitors are most interested in that subject.

Andrew: How about one other idea that the ideal customers want before we have enough users and customers to be able to survey them or to call them up? If we’re earlier stage, what’s one thing to do to figure out what our ideal customer wants to learn?

Neil: So we went through that within our startups. What we ended up doing was we just went out to Crunch Base[SP], Craigslist. We would actually try to talk to as many people as possible and never offer them anything for free because it’s a bit biased, but try to reach out to as many people and see if you can take ten, 15, 20 minutes of their time. Don’t do 30 minutes. Thirty minute chunks seem like very tangible [??] on a 30 minute call.

But if you actually ask someone for a five, ten minutes you can actually get a ton of calls and people will be giving you feedback on whatever you’re trying to create. They can tell you what they’re looking for, problems their trying to solve, and you can sit there as a [??]

Andrew: So phone calls to non-customers but to people who potentially will be our customers, that’s another way to do it. All right, on to the big board then.

The next big tactic that we are going to be talking about is using keywords that you’re already ranking for. We pulled up this screen shot. You gave it to us actually before we started, how are you doing it here? What’s going on in this screenshot, about how to become rich?

Neil: What we were finding out was, when you create content you’ll start ranking. So this article was originally titled, “Four Ways to Become Rich”. What we ended up finding out, when you’re looking at analytics, and I know people say google does not provide it. If you connect it with your web master tools account, and it’s really simple it can be run through your Google AdWords, there will be easy steps to doing it.

It’ll show you what keywords you’re ranking for or which ones are driving traffic. We go and we say, oh we’re ranking for “How to Become Rich” although the title of the post is “Four Ways to Become Rich”. So we adjust the title of the post to “How to Become Rich”. It popped up our rankings, and we started getting more traffic.

Andrew: Do you have a sense of how much more traffic you’d get from a change like that?

Neil: That change, in particular, I don’t have the numbers off the top of my head. I believe it was more than a thousand extra visitors a day, so you’re looking at about 30 plus thousand a month.

Andrew: Just for going back to that specific post.

Neil: That’s correct.

Andrew: You’re checking to see what keywords you’re ranking for, for the overall site. Then you find a blog post that relates to that, that you could make fit within the keywords that you are ranking for already.

Neil: What I’m doing is, I’m looking at my current content, I’m seeing which ones are most relevant to my [??] user base or ideal customers, seeing what they’re ranking for, and then I’m adjusting the titles to increase the rankings for those keywords.

Andrew: How often do you do that on your site?

Neil: Not as often anymore, but when I used to do it probably I would spend three hours a week doing it.

Andrew: Three hours a week, looking at the keywords and then adjusting the titles of past posts so that they speak in a language that people are searching.

Neil: That’s correct. That’s how we’ve got some of our B2B blogs from a few hundred thousand Google visitors a month to 4 or 5 hundred thousand Google visitors a month through that one tactic.

Andrew: Onto the big board for the next idea, which is to promote your content to the right audiences. Let’s bring up this example, then. What’s going on in there?

This is an infographic that you guys created about how to, by the way I say, ‘what’s going on there?’, and then I realize it’s slow for you and there’s some people who prefer to not watch and to listen and so, I think I should just give people a description of the image itself on the screen. What it says there is, “How do colors affect purchases”, and this is an infographic that you guys created. You emailed it out?

Neil: Yes. What we wound up learning from this is, infographics do very well. It has one of the highest forms of ROI with content marketing because it generates a lot more natural back links, a ton of traffic and if the topic of the info graphic is relevant to your core audience you can actually get conversions.

What we found out with KISSmetrics is, a lot of people were signing up or trying to [??] their conversion rates. We started talking about colors because colors actually affect emotions, purchases, right? They have different meanings, they can affect if you are going to click a button, if you’re going to buy or not buy. We started creating content that was relevant to our core product. That really did help us drive more traffic and back links and get covered in places like Forbes and Huffington Post, but it also helped us generate sales. The trick with this is, you have to create relevant info graphics that benefit your audience and is related to your product.

I see dentists out there that are creating info graphics on computer hardware and servers. That’s not related to anything in the dental industry. If you’re a dentist, create info graphics on, how to whiten your teeth at home, right? Or how to whiten your teeth without spending a dollar. Or how to whiten your teeth without even going to the dentist.

Then you can give more of these remedies. You’re going to create back links which is going to help you rank for more dental terms, which also then helps you generate more sales.

Andrew: I’m amazed at how well info graphics still do. Here it is on your site. Let me zoom in so people can see it a little bit better. 6+ thousand tweets, 8+ thousand likes on Facebook, 600+ Google Plus, and Buffer at about 300. That’s the kind of reaction that you get. How did you know what topics to go with so that it would both fit your audience and also be shareable?

Neil: The cool part about infographics is, you’re taking data and making it into visual form. Most people have blog posts that are data rich or there are blog posts. All you have to do is search industry blogs to read them. What you’ll find out is, there’s some that are really popular. The ones that are really popular take the blog post and turn it into infographics and site the blog post as your source.

That’s the simplest way to generate info graphics that are popular. Because you already know that the content version was popular, so if you take the date, make it visual, people are like, “Oh, it’s easier to understand. It’s pretty. Let me share it.”

Andrew: All right, cool. Onto the big board. The next big idea is to use popular content to write similar posts. You did that using a tool that you created, and we’re going talk more and more about it here in this session. What’s going on on this table from the quick-spout tool and how did you use that to write content that’s already popular?

Neil: Yeah, so what I would do is I would look at my content that I currently wrote on my blog, and I would see what gets the most Facebook shares, Twitter shares, Linked-in, Pinterest, Google+, et cetera. And that would tell me what my readers want to read more of, and what they want to read les of, right? Because the ones that don’t have too many shares and are at the very bottom of the list aren’t the popular ones. The topics that are at the top should be ones that are more focused on writing. I also did this by putting in competitor URLs and seeing what’s the most popular on their site.

And the same thing: it told me, because we have similar readers. It told me what my [composure] writing that my leaders love. So doing for my own site and for my competitor sites, it then ended up giving me a list of ideas and topics that they already wrote on that did extremely well, and then I created my own flavor it, right? So I know if Pinterest did well, I starting creating other similar posts relating towards Pinterest that cover different topics. So my most popular Pinterest one was, “The Marketers Guide to Pinterest”. I can also do one on “How Marketers Can Monetize their Pinterest Traffic” because it’s still relevant but yet it’s different.

Andrew: Is that one that you actually have done that was especially popular for you, or what’s a topic that you–

Neil: I [didn’t] do it with Pinterest, I did it with Twitter. So if you look at the Twitter one, I started putting a lot more [content], like how to get more likes, how to become a Twitter power user. So I noticed that people liked Twitter and how to grow their Twitter engagement and presence, so I started creating a ton more infographics and continuity around Twitter traffic and engagement.

Andrew: Gotcha. All right, so if you were to do the same thing for Mixer G. I think it’s going to be a little bit hard for me because there’s just so much data. But I plug Mixer G into the quick-sprout tool, and I see that an info-graphic on webcam settings was extremely popular across all social networks, what would you do based on that?

Neil: Yeah, so– it’s telling you that people enjoy also reading Mixer G to get tips on how to do video production, and interview because you’re really good at it. So you could also do an info-graphic on how to come up with the right interview question. Or how to interview, how to interview someone, right? Or how to interview your X, Y, Z. Whatever it may be. You can end up giving advice on questions to ask, what not to, et cetera. Or you can do an info-graphic or content piece on Video Etiquette 101: What Not to do During an Interview.

Andrew: I see. And so this explains why someone who also does an interview program decided that he was going to do a series on copywriters. Maybe he came into Quick Sprout and saw that– where is that? Guess that just popped down a moment ago, it was up there– the copywriting course did especially well across social media, and so maybe he saw: hey, Andrew’s doing well with copywriting, then I should be doing a series on copywriting, a series of interviews, if his copywriting interview did so well. That’s the kind of thing that you’re talking about us doing. It feels a little bit like I’m spying on my competitors. It feels almost inappropriate.

Neil: [laughs]. It’s like you’re the CIA. The NSA.

Andrew: Yes! But that’s the idea, let’s take a look again at this, and so, if you were a competitor Mixergy you might say: oh, Robert Green does especially well, I should see if I could do another interview with Robert Green, or some kind of blog post about him, or his book mastery. That’s what we’re talking about.

Andrew: Dave Kerpen writes likable. So here’s the thing though: it’s hard to tell why they’re doing especially well just by looking at this. My sense is that someone on Robert Green’s team liked the interview so much that they bought ads on Facebook and that’s why there was so many likes. My inside knowledge of this info-graphic was that it wasn’t just the info- graphic on its own that did well, it’s that we emailed people and we asked them to Tweet it out and as a result it did really well on Twitter as you can see here, and then all the other social networks came along for the ride with it. So, when you’re spying on a competitor, and I hope you don’t mind me saying that this tool helps us spy on competitors, how do you know what– how to use what you’re seeing there?

Neil: Yeah, you can’t just go based off the URLs and the numbers, you actually have to plug them in, go to the site, and actually see what they said, right? Because sometimes in the posts at the bottom they’ll say: ‘hey, can you please share this or tweet that out?’ And you can’t always tell if someone did an email blast, but you can see if they did anything unique. For example, if that one on Robert did extremely well from the Twitter perspective, you can try to go back to Robert’s Twitter profile and see if he promoted and has a lot of followers. If that’s the case, he may be worth interviewing again because he knows that he can drive quite a bit of traction any time he pushes something out.

Andrew: Gotcha. I can see that. All right. I should not be encouraging more people to copy what I’m doing by going to Quick Sprout, but I don’t care. Actually, frankly, if it helps, I’m happy that it helps people. Do you find that people then use this to basically spy on Quick Sprout to see what your big blog posts are and then write similar blog posts because if it works for Neil on social media it should work for me.

Neil: My results are cash so it’s not going to be an accurate representation of what it is in Quick Sprout. I’m showing you what I want to show you.

Andrew: Oh really? So you’re not actually making this available to others.

Neil: I am but not for the Quick Sprout URL.

Andrew: For QuickSprout.com.

Neil: It’s not going to work the way it should.

Andrew: I see. So you’re thinking it’s so powerful why let other people spy on me using it.

Neil: Yeah. I don’t want to jack my stuff, jack other people’s stuff.

Andrew: All right. Fair enough. Is there another way? I don’t want this to come across as a Quick Sprout commercial. Is there another tool out there or other ways to see what’s popular on other sites?

Neil: Yes, there actually are. I like using Open Site Explore because Open Site Explore gives me back links similar to [??]. So it can actually show you if you put in a competitor URL it’s linking to specific pages. And if you’re noticing a lot of people linked to a specific page, that can tell you what to do. SEM Rush and Spy Foo is a good cued data from the standpoint of just a paid organic perspective because people are getting a lot of traffic for a specific word that you can Google it. You can see what the content was, what the article was specifically about, how many social shares it got, et cetera. Those are some tools that are worth checking out as well.

Andrew: So we’re looking at SiteExplorer.org, SEMRush.com for ad buys and SpyFoo.com.

Neil: Yep.

Andrew: Cool. All right. On to the big board yet again. Partner with popular blogs. Where is that example that I thought we can talk about here? There it is. You found this out, and then you started to do stuff with Moz. What happened?

Neil: Yeah. So what ended up happening was I ended up finding out by looking at Moz that they created this guide called “The Beginners Guide to SEO” and it’s an amazing guide. They actually came over the clouds to do these awesome [??] 20,000. 30,000 work content pieces that teach you a topic from A to Z. They just didn’t create a lot of them. They just created one.

So I was like, “You know what? Why don’t I create some of these?” I just started cranking them out one a month during my peak. And so I think I did one a month. And I started getting a ton of traction. I made sure I didn’t jack other people. So if Moz did SEO I did advanced SEO. And I leaned to them. I talked about how their guide’s great. This is covering advanced. If you want to learn about beginner’s stuff read theirs, and they shared it throughout their email list. I think the email list is over 100,000 people, right? That drove a ton of traffic.

So we’re playing nice with competitors although they’re in the same space, but we don’t sell products against them. It helped drive quite a bit of traffic, and we still keep doing that, the same tactic we create guides. We go out there. We see who’s in our space. We mention people within the guides that we think are relevant and can benefit the readers.

And we’ll find out, “Hey, if I mention Mixergy in the guide and talk about Mixergy’s strategy in content marketing and how it’s great.” I would ask you, “Hey, Andrew, if you really like it I already [??]. Feel free to blast it out to your list or tweet it and share it. And that’s helped us generate quite a bit of traffic.

Andrew: Your writers at KISSmetrics do actually mention Mixergy quite a bit which I like. Can I tweet it out? They never ask me to tweet it out. I just get an alert, and I tweet it out.

Neil: On that side we don’t ask because we already have enough on our own. I don’t actually ask anyone for Quick Sprout either. Then you start getting into a certain number like a half a million plus visitors a month which doesn’t matter, right? You’re going to get traffic no matter what. Then at that point we don’t like bugging people.

Andrew: I see.

Neil: When you’re got 20,000 visitors a month every ask really helps.

Andrew: So you intentionally will mention people in your guides, and then you go back to them and you say, “Where you’re in here. If you’d like to share this with your users, go for it.”

Neil: Exactly.

Andrew: I can’t believe that Moz would email out to their audience for free.

Neil: Yeah.

Andrew: That’s huge. It’s hugely popular.

Neil: Yeah. Very popular. We’re one of the most popular sites in the Internet.

Andrew: So one of the things that we found out was through talking to you before this session. Let me see results are 361,494 people read the second guide that you created and 212,000 people read the first guide that you created. Those are huge numbers.

Neil: Yeah.

Andrew: So, I don’t want to, I know that the bigger message here is to partner with bigger sites. So the big idea is that you contacted them, that you wrote about them, that you didn’t copy them but added to what they were doing. If they were doing the beginner guide, you wrote the advanced guide. I understand that’s the big message here, but if we were to zoom in on this one specific tactic, and look at the guides that you create. What does it cost you and how do you create a guide like this?

Neil: Yeah, so the guides, the costs have changed over the years. Right? So when I first started doing it, the guides would cost me around 40, 50 grand max. And now the guides are costing around me around 20 to 30 grand. Right?

Andrew: Twenty to thirty grand?

Neil: Yeah, up to 30 grand. Sometimes I can get it done for like, 15 grand, if it’s a small guide. But that’s roughly what I’m paying, cause I need help on the writing. I can’t write the guides all by myself. And as you can see from each guide, there’s also a co-author right there.

Andrew: Yeah I can see here.

Neil: The design is very expensive as well. I could spend 10 grand just on the design. Then [curding] it, is expensive as well. Right? And paying someone to make it HTML and CSS compatible with [??] because it’s almost like one huge infographic. Then on top of that, I have to make it pdf compatible, and then make sure the pdf’s, are on iPhone, Kindle, Android acceptable compatible as well.

Andrew: So this is a huge expense. And I could see on this one, the advance guide, it’s also written by you and [Su Jong Patel]?

Neil: Uh-huh.

Andrew: Is that a relative of yours?

Neil: Yeah. [laughs]

Andrew: It is? So, you and Su Jong Patel wrote this thing and it cost a lot of money to produce. I can see you’re making the money back with this Hello Bar add and the very top of the page. Right?

Neil: Yes.

Andrew: So that, that’s how you know that it was worth your while to do it. For someone who is just starting out, who is not ready to invest that much how do they have a simpler guide? How do they do it on a budget?

Neil: Well, you don’t have to spend that much money to write. You can write the guide yourself. You can have your in-house designer do it. Or you can go to [Gerbal] or 99 Designs, they are the cheaper designers. It still looks good. I just pay for people that I know will produce really good work and I don’t spend the time trying to find cheap labor like I used to. But, I’ve seen other people get whole guides like this done for $2000.

Andrew: Well, yeah, all your guides do look really beautiful and the design, looks a lot like the design on Quick Spout, on the site itself. All right, cool, that’s really helpful. Let’s go to the Big Board where the next idea we’re going to be talking about is, using free tools to create more traffic than content would. Right. So even though we’re talking about content marketing, you’re thinking of tools as content; and actually more powerful than traditional content.

Yep. And now, actually, if I go over to quickspout.com without the about, let’s go to the . . . to my web browser. It used to be that if I want to Quick Sprout, I saw your blog, today I see this. This is your tool?

Neil: Yes. That’s my tool. What I found out is, tools get people coming back more often, increase usage, increased [??] loyalty, a lot more traffic, much higher ROI from the tool than actually generating contact.

Andrew: This tool allows people to, actually, how would you describe what the tool does?

Neil: It helps you spy on you competitors and it helps you analyze your site and figure out if there’s anything that you’re doing wrong from the on page [SCL] perspective.

Andrew: I remember when you first created this course that today does so well, this product that you’re selling through the Hello Bar at the top. Now it does so well, you can afford to spend 10’s of thousands of dollars on a guide because you know that it’s going to sell and bring back that money with a little bit of profit and more users will become fans of your work, and so on.

But I remember when you started out. It was much simpler than that. It was a pdf. guide and phones calls and, you know, a lot of attention, but not that involved. The reason I’m asking is I’m wondering was this tool simpler than it is today because today it’s a pretty intense product.

Neil: Yeah, so the tool started getting expanded on. At first it was just a one page report. Then we started adding competitor analysis, social media tab, like we discussed earlier so it’s used spy on your competitor and figure out which content he’s doing really well. When we first started out it was just the web page report. It was our version of a minimal, viable product, it got usage. And then we realized, oh cool, we should add more to it and get more usage.

Andrew: So if we’re going to create a tool, is there a way for us to figure out what kind of tool would work?

Neil: Yeah, you just ask your readers. We actually used [Quali-Reader’s Survey] to survey our readers, to figure out what tool to create. Everyone said, ‘we’d love a free SCL tool that helps us understand what we’re doing wrong or right with our site.

Andrew: So you explicitly say, ‘what tool should I create?’

Neil: Yeah. I actually ask. Like, ‘If I create a free tool, what would you like it to be? Right? So, I first ask the question of, ‘would you like me to create a free marketing tool for you?’ I will get a yes or no. Yes. What kind of tool would you like me to create? And then they’ll tell me and then I’ll go and create it.

Andrew: And how much would the first version cost you?

Neil: I don’t know the exact amount off the top of my head, but my guess is 50,000.

Andrew: Oh, 50,000.

Neil: Maybe somewhere around that. I think 50. I’ve spent more than a hundred on the tool so far. Somewhere around that range is my guess.

Andrew: If we were going to start smaller then?

Neil: You could start smaller. I just pay expensive people for the tools.

Andrew: I remember the days when you used to get free interns. Where it was just, I found a guy who knows a guy who’s really good; he’s doing this for me. Today you’re spending top dollar.

Neil: Yeah, because I just went to Digital Telepathy and said, hey Chuck, design this for me.

Andrew: Okay. So if we were going to start smaller, how do we have the simple tool created that’s not going to cost us a lot of money but will start to do some of the things that the Quick Sprout tool does for you?

Neil: You can find developers on Elance. There are some decent developers on there. Of course they’re not going to be the best developers that cost three hundred grand, but you’re going to get someone chat can actually create a product that works. For design you can go to Dribbler Nine-Nine Designs and find somebody that can wire something up, and you can actually create a tool for five, ten grand max. Or what you can also do, that I’ve tried doing, is there’s already tools in almost every space.

So in the marketing space there’s a company called the Widexle or Windexle, something like that, and they have a free SEO analyzer and for $99 you can buy this script and put it on your site and act like you’re your own SEO tools. That’s great because if you actually get usage then you know that, hey, maybe I should spend money creating a really good tool after that.

Andrew: What was that tool, Windexle?

Neil: It was Windexle or Windaxle something like that. It’s a site that offers marketing tools for free. You can put on your own site and act like it’s your own tool. It’s like a Windexle analyzer.

Andrew: I think I just saw it. All right, so I’ll find it.

Neil: Windexle or Windaxle. I don’t know exactly how it’s spelled. I used to do that years ago. And I did it with Advanced Consulting Services. I used that tool on their site. That tool actually does generate traffic and it was 99 bucks or something.

Andrew: I don’t remember the evolution of the tool on Quick Sprout, this one.

Neil: It just came from one report. There’s the web site analyzer, then add the social media report add the competitor analysis.

Andrew: But today it’s on the home page, it’s replacing what used to be Quick Sprout, essentially. People of course could find it underneath the blog section, but where was it at first before you know it was so powerful it’s worth replacing the homepage with it?

Neil: I just put it on the home page right when I release it. I did an AB test.

Andrew: Ah, I see. And then what are you looking for to figure out if it’s worth keeping there?

Neil: Worst case I was just going to go back to the blog being the home page if it did not work.

Andrew: So what numbers are you looking for to figure out if your tool works?

Neil: I was looking at unique URLs entered and there was more than a thousand a day and I was like, oh cool. So if more than a thousand people are using it a day then it’s doing well.

Andrew: Oh, cool. Stu McLaren, who created Wish list Members, said that he finds the same thing in the content sites that he works with. That if, instead of paying for another report, the entrepreneur would pay for a WordPress plugin. It would maybe cost a little bit more, but it would add more credibility. It would be used more, valued more. And actually on his membership site the giveaway is not just content, but once a month he gives away a free WordPress tool.

Neil: Cool.

Andrew: Interesting, I didn’t realize the power of it. All right, let’s go on to the next one. Put content into a visual format to make it easy for people to understand, you talked to us a moment ago about how you do that. Tell me a little bit more about what kind of content we should be looking for and how it’s worked for you.

Neil: Sure. The thing with content and everything that’s visual, we’ve especially done this with Info Graphics, is that we found that not everyone is a text or numbers based learner and showing things in a visual format makes it much easier to understand for anyone, especially newbies, which are typically the largest audience of any segment, right? You end up getting way more traffic. So we started putting everything that was text based and data based into visual format through InfoGraphics and we started seeing a lot more traffic. There’s a whole post I did on Quick Sprout one time called, like, why content marketing is the new SEO and it broke down the ROI file of InfoGraphics.

Andrew: Here it is: Why Content Marketing is the new SEO. Where is that? You said that this also was turned into graphics?

Neil: No, this one wasn’t. It was breaking down the kiss metrics on our Infographic costs of ROI on it.

Andrew: Got ya.

Neil: And ROI on it.

Andrew: All right. Let’s make sure to include that. I’ll grab the URL and we’ll include it on the page with this video so people can go and read that article fully. You know what actually? What’s a simple way to create an Info-Graphic? I hate that I keep asking you what’s the budget option. I think, though, that if we’re talking about the high end, anyone knows they could go to Chuck over at DT, Digital Telepathy, and they’re going to create great stuff. The challenge is if you’re just experimenting with this. If you say, “I saw Neil Patel on Mixergy. He had this idea. I want to try it. I’m not ready to go and spend $50,000 with Chuck.” What’s the simpler way to test out an Info-Graphic?

Neil: Ninety-nine designs, you can use the one made for $250.

Andrew: $250 they’ll create an Info-Graphic? Actually, multiple people will create Infographics, and then we pick the one we want.

Neil: Yes.

Andrew: All right. There you go. Final point here, don’t forget to market your content. I always think about just creating these interviews. I don’t think about marketing them.

Neil: Yes, and this goes back to sharing your content, right? Everyone writes content and thinks that the content is going to spread and they’re going to get a lot of traffic from it. That’s not necessarily the case. It doesn’t matter if you put out a masterpiece. If no one reads it, it’s not a masterpiece. You’ve actually got to get out there and spread. So by emailing people that you mentioned in a blog post, asking them to “Tweet it out.” Share it, right? All these things help with the traffic generation. And that’s a big thing. A lot of bloggers don’t do Outreach.

Andrew: And so if I mention someone in an interview or mention someone in a blog post or mention someone in an Info-Graphic, do I just email them out and say, “Hey, I mentioned you in here. Tweet it out.”

Neil: You can kindly ask them, right? You don’t have to enforce it. But you’re like, “Hey, Andrew. I mentioned you.” So if I were you and let’s say you put an interview like [???], right? Let’s say it was just a general interview and not a Master Class, but let’s say, I have a perfect example. You just did the 1000th interview, right, on Mixergy 1000th interview?

Andrew: Yes.

Neil: So someone on your team emailed and said, “Hey, just want to let you know you were one of the ten people in the 1000th interview in Mixergy 1000th interview.” Feel free to share it. Click here if you want to Tweet it out. And I just clicked it and it already gave me the [???]. Click, right? And it Tweeted it. They messed up on it because the first thing they Tweeted said, “At Mixergy” which means it won’t get as much traffic.

Andrew: I thought I told her about that. All right. I’ll have to talk to her about that. That is a big problem.

Neil: Yes, so I adjusted that part so more people would see that. And then I Tweeted it out.

Andrew: Thank you. And the way that we often do it actually, I copied from you. I think when you first interviewed me for your site, you emailed me afterwards and you said, “Andrew, here it is on the site. If there are any mistakes, let me know.”

And I realized that when you say something like that without asking, when you say something just nice and considerate like that the person’s so much more receptive to anything else you say afterwards. So I don’t know that we, no actually we do. With interviews we do say, “Could you please help Andrew by Tweeting this out?” We are very explicit about it.

Neil: I’m going to help Andrew, click.

Andrew: Yes, it’s either Anne Marie, who actually executive produced that one interview that you’re talking about. Or Andrea, who is our interviewee liaison. We’ll email afterwards and say, “You’re up. It’s up on the site. Thanks for doing it. By the way, if you’d like to help Andrew out, here’s a way to do. Tweet it.” And so we found that that works. Is this one way that you’ve done it? Is this your email? Let me see if I can zoom in properly. There it is. And why don’t I read it out a little bit.

Neil: Yes,.

Andrew: Its subject, “You Should Be Blogging About,” insert blog post topic. The body is, [Insert their first name], as an avid reader of, [Insert their site name], I would love to read about [Insert blog post topic]. And I think your other readers would as well. Your content on, etc. What’s going on with this?

Neil: So I would use this as an email template to get more guest posts.

Andrew: Okay.

Neil: And I use guest posts as a way to promote my content. The reason being is if you, Andrew, have a blog called, “Mixergy” and I and Neil have one called, “Clicks Brow” and we both have entrepreneurs who rebuilt our sites, why not try to encourage you to let me guest post on your site? And then I can link back to my own site which [???] readers.

Andrew: I see.

Neil: And that’s like a simple way to actually generate quite a bit more traffic. And if you guest post once or twice a week you’ll start noticing that you’re getting more reader base from your competitors or the people within the industry.

Andrew: Guest post on other sites – you don’t do that anymore?

Neil: I don’t, I used to do that a lot. I used to do five guest posts a week.

Andrew: You’ve outgrown it?

Neil: Yes.

Andrew: You’ve outgrown the lot, and the way that you did it is by, and I’ve watched you do all the things that we talked about here. If we were to do it all, let’s bring up the big board right now, here are all the different topics that we talked about today. If we were to do one, Neil, which one would you suggest that we start out with? If we were just to say, “Hey, I learned from Neil. I’m amazed by what he does. I just want to dip my toe in the water and see what I can do if I use Neil’s ideas. Which of these ideas would you recommend?

Neil: I would recommend, actually, the last one, which includes guest person. Don’t forget to monitor your content, so soon you’re already creating content. That’s actually the most effective [?]. Even if you don’t have time to create content yourself, go create content on other sites, or people within the industry, because it actually makes quite a bit of sense. Don’t do it to manipulate Google or try to, like, grow means [unintelligible]; do it to because it will actually guide sales to your business.

Andrew: I see. And, it’s not about search engine optimization anymore, or it’s not about the anchor text that you get when you do a guest blog post somewhere else, but it is about raising your profile with your audience and getting the traffic. If we were to do it, Neil, how do we know which sites to go guest post on?

Neil: The easiest way to look at it is Open Site Explorer’s domain authority. So if you go to Open Site Explorer…

Andrew: Yeah, let’s do it right now together. I’ve got it up from before, now, don’t I? Open Site Explorer–there it is. All right, so let’s suppose I was Neil Patel today, with Quick Sprout…

Neil: So let’s say, if I’m interested in going to other entrepreneur blogs…

Andrew: Yep.

Neil: So the first thing, we would use a Google blog search to type in my “entrepreneur blogs” and we would get a list, right? After you have them, you can end up going to Open Site Explorer and then typing in the URL, like, Mixergy.com.

Andrew: I see, so first you find entrepreneur blogs on Google’s search results, and then you type them in here to see which of them has the highest authority, and that who you’d approach first.

Neil: That’s correct. Because you can type in “entrepreneur blogs” on Google, or “top 50 entrepreneur blogs” and you can end up creating, getting risk, right? And you’ll see a domain authority number–usually the higher the number, the better the site. Also, then I would go to Mixergy to see how many sell-per-shares you’re getting per post.

I would also look at how many comments you’re getting, because the more comments means the more engaged readers you have. The more engaged readers you have, the more likely they are to click through a link and actually buy something from me, versus readers who don’t comment, share, do anything.

So that’s why I figure out which sites to go on and guest post. So I’m looking for the sites with the highest domain authority, the sites that get a lot of social shares, and sites that have a lot of comments, cause it shows that they’re getting engagement. If I had to throw in a fourth one, it’s sites with big email lists, but a lot of sites don’t publish their email lists.

Andrew: Okay.

Neil: The number.

Andrew: Well, as always, this was incredibly helpful. It’s so great to have you back on here. You were, before I did interviews formally on Mixergy, or even at all on Mixergy, you were one of the people who came out to a Mixergy event, and onstage, you talked about marketing, back when you were at the stage when you had to find [what] you called “the monkeys”. You said, “I just need anyone who can do this work”, and that’s where you worked. Today, you’ve gone first class. You’re hiring the top of the top, and then buying their companies. Hello Bar you bought from Chuck.

Neil: Yeah, I bought from Chuck.

Andrew: Congratulations on all the success. Are you still at conferences?

Neil: I still go to conferences, a lot of them.

Andrew: All right. I would suggest this, first of all: anyone who’s listening, as a follow-up of course go check out the tools including and especially the one on Quick Sprout.com, but number two: if you see Neil at a conference, please go over and talk to him and have a conversation with him. I’ve said this so many times: people who came and met you at the Mixergy conference were amazed by how approachable you were, by how helpful you were, because you were such a big name who’d done so much, it felt like, “Well, does Neil have enough time to help me?”, and they were always shocked that you did. I imagine that today it’s scaled back, but that you’re still there for people.

Neil: If you ever see me at a conference and you mention Mixergy, let me know and I’ll buy you a drink.

Andrew: Oh, do it. Thank you so much, Neil, for doing this. Neil, would you hang on for one second? I want to ask you something related to another Mixergy interview.

Master Class: The Obstacle is the Way

Master Class Toolbox

Transcript

Andrew: You know how as entrepreneurs we keep facing obstacles? Lack of money, a developer we work with suddenly quits, our idea doesn’t work out, we’re too short, or in my case, very handsome, all these obstacles just get in our way constantly. Well that’s what this session is about. It’s about how to turn your trials into triumphs.And to lead us we’ve got Ryan Holiday, he is the founder of Brass Check Marketing. And the session is going to be based on his book which is called, “The Obstacle Is the Way.” We pulled out some key ideas from the book which we’ll be talking about throughout the session. Ryan, thanks for leading us.Ryan: Yes, it’s good to be back.Andrew: I want to understand the problem and as tough as it is for me to be too handsome…

Ryan: Sure.

Andrew:…or some of those other challenges that I brought up earlier, the British had an even bigger challenge. And in the form of the Germans’ use of a new form of warfare in World War II. What was that?

Ryan: The story I tell in the book is this idea of – well I talk about it in two ways. We talk about the Blitzkrieg and then are you talking about specifically the North African desert?

Andrew: Yes, the Blitzkrieg was huge.

Ryan: Sorry, you cut out for a second. Can you hear me?

Andrew: I was talking about the Blitzkrieg, lightning war.

Ryan: Yes, sure. So what happens in World War II is that the Nazis unveil this tragedy known as the Blitzkrieg, which is essentially this lightning attack by using mostly tank and other mobile, sort of, forms of warfare, that is designed to catch the enemy not only off guard but sort of overwhelm it with speed and force in a very short amount of time. And it’s designed to sort of create a break in the enemy’s lines that forces them to scramble.

And what I talk about is shortly after the invasion of Normandy Eisenhower, he’s lead up to this point what is the largest amphibious invasion in military history. But slow going allows the Germans to wage this counter offensive. It’s 200,000 men. It’s 13 divisions. They’re threatening to essentially throw the allies back into the sea, which is the worst place you would want to be if you’re trying to retreat.

Basically the entirety of World War II rests in this moment, and there’s this magnificent scene. Eisenhower, he assembles all the generals into a conference room in Malta and he says to them, “The present situation is to be seen as one of opportunity for us and not disaster.” He says, “There will be only smiling faces at this conference table.”

And the reason he says that is for the first time an allied general sees the fatal flaw inside the Blitzkrieg, which is that it’s basically putting all your eggs in one basket, right? By charging ahead, not worrying about your flanks or your supplies, you are charging head first into a net. And Eisenhower realized that if the allied troops bent instead of breaking, if they sort of allowed this and they circled around it, they would capture something like 50,000 Germans in this net. Patton, he says, “It’s like they’ve just stuck their head in a meat grinder.”

And so up until this point the Blitzkrieg had been undeniably effective. It worked time and time again because the enemies always saw it as being overwhelming, as being intimidating, and they broke. They broke discipline. But what Eisenhower was able to do was see it not just objectively, but almost optimistically. He built a strategy in response to it that created what was known as the Battle of the Bulge, which was ultimately one of the most decisive allied victories in World War II.

And so for me this is a metaphor, right, because in our own lives we face these obstacles. It looks like a competitor is about to move into our space, they’re way bigger than us. Someone comes charging at us. Our first instinct is to get out of the way, to dodge it, to assume we’re more or less fucked, right? But it’s not. And if you can hold your ground and see objectively what is in front of you, you can often find the weakness inherent in that position of strength. And that’s what Eisenhower did if that answers your question.

Andrew: Okay. It does answer my question. And I was kidding earlier when I said too handsome. Because frankly, design has always been a challenge for me here on Mixergy, and I hired a stylist to help get me dressed. And I found someone, finally, to help me with the design of the interview, the layout here, of our conversation. But, I find that I have modern day problems.

And as I was looking at your book and going over what we’re going to be talking about today, I see historical references to Rockefeller. References to big stars like George Clooney are coming up. How does their challenges relate to my every day problem of someone else about to start an interview program that has more money than me, has a big studio? Or someone who’s listening in my audience who has a challenge who can’t afford to pay their developer what they’re worth, and their developer’s working part time and they can’t get as much work out of them as they need?

Ryan: Sure, it’s interesting. So I based this book on an exercise or the thoughts of Marcus Aurelius, the Roman emperor. And I think you read this book, you read what are essentially the private thoughts of the most powerful man in the world, written in about 170 A.D. And what you are struck by is how relevant the thoughts of this man writing 2,000 years ago are to the problems that we face.

And there was actually one passage that he writes in there where he’s talking about the problems faced during the reign of the emperor Trajan, who came well before Marcus Aurelius, and how similar the problems that Trajan faced were to the problems that Marcus Aurelius faces. You extrapolate that out, the problems that you and I face, the problem that President Obama is facing right now, are more or less the same timeless human problems: not having enough money, not having enough time, being stressed, being over worked, being over-burdened, facing bankruptcy, facing conflict, facing heartache, facing loss.

We all face these more or less same problems. Yes, the manifestation of them changes. For them it’s a shortage of gold coins. For you it’s a shortage of access to a line of credit. Whatever it is, right? The details change but more or less we are human beings who are dealing with the same problems that we have always dealt with.

Andrew: I see.

Ryan: And so I wanted to focus on sort of objective historical problems where there was not much controversy and there was not much argument. So if you’re sitting there telling me that you’re having a problem with your developer, I’m going to tell you what you can do about it. And then you’re going to go, “Oh, no. But my problem is different because it’s this. And then I’m not going to be able to do that.”

I wanted to sort of pick things where there’s no argument. Like what Eisenhower did and it happened, it’s done, it’s clear and it’s inspiring because I would much rather deal with a developer problem than 13 Panzer divisions, right?

Andrew: Right.

Ryan: And so the point is what can we learn from history? What I say about practical philosophy is that, you know, in the last 5,000 years chances are someone faced more or less the same problem that you’re facing right now. And they got over it, it didn’t kill them. And they probably wrote about it. So let’s find what that is and at least incorporate that into our solution, not to say we have to do the exact same thing, but we can certainly learn from it.

Andrew: So you’re going after timeless ideas as opposed to tactics that will only work today and be out of date tomorrow?

Ryan: Yes, exactly.

Andrew: Okay. All right. Why don’t we start with them then? Here’s the first one and this is really a timeless idea: control your emotions. There was a time where I mentioned this guy a moment ago. Let’s bring him up on the screen. This is John D. Rockefeller. We think of him as being one of the most successful entrepreneurs of all time, but he was around in 1857. What happened in 1857?

Ryan: Yes, so 1857, shortly before 1857, Rockefeller gets his first job. He’s 16 years old. He’s a sort of aspiring financier. He’s a bookkeeper. He wants to be an investor, right?

Andrew: Okay. And his first job is an assistant bookkeeper.

Ryan: Yes, he’s making 50 cents a day, right?

Andrew: Okay.

Ryan: And the panic of 1857 strikes. It’s a crippling national depression, probably one of the worst that America has ever faced. It actually originates in Ohio where Rockefeller is based. It’s pretty much the worst thing that can happen to a kid who just got his first job in finance. But Rockefeller, he later said, “I was inclined to see the opportunity in every disaster.” And that’s what he did. He actually used this moment in time, this financial panic as his sort of college education in the market.

So he sits down. He watches what everyone else is doing; he sees the mistakes that seasoned investors are making. Because he basically has no money in the market, he’s able to be objective about it. He’s able to see how disastrous emotional reactions can be to market fluctuations, the problems that it causes. And then crisis after crisis in his life he’s able to apply these lessons because of instead of freaking out, instead of quitting or running away and getting another job, he was able to see this all objectively. So the first part of the book to me is about controlling those perceptions, controlling those emotions so we can both understand and learn from whatever situations we find ourselves in.

Andrew: Okay. Was there a time in your life where you felt like you’re disaster striking, and you wanted to lose control, wanted to lose your emotions?

Ryan: Sure. All the time. It’s funny, you know, I talk about one of my favorite examples of controlling your emotions. I talk about sort of space training, right? As they train the first set of astronauts, it wasn’t so much their ability to fly aircraft that qualified them for, you know, the Apollo missions. It was their ability to regulate and control their emotions.

Andrew: Yes.

Ryan: To not hear a bunch of alerts and then start hitting random buttons and blow themselves up. That’s basically the main skill they were looking for in these astronauts. And so I really liked that, and I was thinking about all the problems that I’ve made worse in my own life. You know, someone sends me a nasty email. I want to respond, I want to get angry, I want to tackle, you know, a superior about it. I want to fight back against them.

When really what I realized early on when I was working at a large company, I was the Director of Marketing at American Apparel, I realized that there would be these emails that I would get. And if they would make me so upset, and then I thought for a second, “What if I never saw this email?” Like, what if I accidentally deleted it or I didn’t read it? How much different my life would be, right? The conversation would resolve itself or sputter out.

And I wouldn’t be upset and I wouldn’t be angry, right? I would just not know that this potential trigger had been pulled. And it’s what got me thinking, I can just have that reaction and not respond. I don’t have to read it and freak out. I can read it and not do anything about it. And it’s funny I read that stuff about NASA and I included it in the book. And a few weeks ago, Chris Hatfield, the astronaut, he did a [???]. And he was joking that in space there’s no problem that a human can’t make worse.

And I think that that’s what you want to think about with your emotions which is okay, something happened. It’s an objective event outside you. Can you not make it worse with an overreaction? Can you not make it worse with your emotions, either being upset, being hurt, being surprised, you know, being resentful? Can you not make it worse with your emotions? Like, the other cliche is the first rule of holes is to stop digging. Well, that’s the first thing our emotions do usually, is dig us into a deeper mess than we were already in.

Andrew: Okay. All right. First idea we talked about is controlling your emotions. Not allowing them to get away from us. Let’s go to the next one which is to use the obstacle against itself. You give the example of how this man did it. Let me bring up Gandhi. What was the obstacle that he came across?

Ryan: Well, it’s interesting. You have Gandhi who was, you know, an educated, incredibly smart man. But he had essentially no resources, right? And there he is. He’s facing the imperial British Army, the most successful largest army on earth, right? And he somehow manages not only to defeat them, but they defeat themselves because of the position that he put himself into. So I think what a lot of times we do we find ourselves over-matched in a particular position or a particular conflict; we try to imitate the people that we are competing with or that we are challenging. We try to do what they do.

And it’s very problematic to come at people in their own strength. So what Gandhi did was not challenge the British militarily, he challenged them politically and ethically. And he used essentially the size and the strengths of the British Army against himself. He challenged them and put them in positions where they would have to use force against a significantly weaker enemy that caused them to lose the moral high ground. What he would do continually, whether it was the march to the sea.

Andrew: Why did he do the march to the sea?

Ryan: Salt March.

Andrew: Here, that’s what we’re looking at, right? I pulled it…

Ryan: Sure.

Andrew:…from this site. The Salt March. Why did he do the Salt March?

Ryan: So basically what Gandhi did was that he identified a completely bankrupt part of British policy which was essentially the tax on salt, right? His argument was put many people in poverty, prevented people from being self-sufficient and made them dependent on the colonial British.

Andrew: Mm-hmm.

Ryan: So he said look, we’re going to march to the sea. We’re just going to collect our own salt. It wasn’t actually a replacement. It was a symbolic gesture. We’re going to march to the ocean, and we’re going to collect salt in flagrant violation of this policy. We’re going to force them to enforce it. The optics of that policy are going to be displayed for the entire world to see. We’re going to incite them essentially to embarrass themselves.

Andrew: Okay.

Ryan: He didn’t say look, we’ve got to raise an army and then we’re going to fight the British in a pitched battle because they would lose. Instead we are going to do something where we look particularly harmless. Where what we are doing is something that people empathize with or sympathize with or basically find no fault in, and we’re going to force them. We’re [??] force their [??] force them to do something that will be indefensible. That’s what he did. He would do that over and over again.

It’s the same playbook that Martin Luther King later executed, which was to sort of lean into the strengths of your enemy. Their…in many cases that’s their numerical and forced superiority, forced them to exercise that in an indefensible and justifiable way and use the media and public perception against that…against that enemy until they eventually have to either change the policy or relent entirely.

Andrew: Okay. So instead of trying to combat them by being exactly like them, which is what most people would try to do, you want to use their power against them. In Gandhi’s case — in the example that you just gave — I think Lord Edward Irwin was the viceroy of India. He had basically two options: one was to go in there and stop them from marching, and the other was to just let it go and hope it peters out and hope it quiets down.

He decided, you know what, if I attack them then it’ll look bad. Like you said, the optics are just not going to be helpful. On the other hand, he said he’d let them go and let them do it. What happened was this big march kept getting bigger and bigger and made a huge statement that backfired on Irwin.

Ryan: Right. Essentially it puts them in what strategists call the horns of a dilemma. You have to pick which one you want to get impaled by…

Andres: See.

Ryan: …and neither of them is pleasant.

Andrew: Okay. There’s good advice right there. Let’s go on to the next big point which is to reverse your perspective. I mentioned earlier that we were going to talk about this man [pause]. This is George Clooney. You use him as an example.

Ryan: Mm-hmm.

Andrew: He was…I didn’t realize that there was a point in his life where he was bitter. I feel like look at how good looking he is and he…

Ryan: Sure.

Andrew: …always was. So what is…

Ryan: Sure.

Andrew: …so what does he have to be bitter about?

Ryan: Did you know George Clooney almost played professional baseball as well?

Andrew: No. I didn’t know that.

Ryan: Yeah. I learned that recently. Basically the story that I tell is one from early on in his career. Like all actors who are just getting started you go out and you go on auditions. Right? And you are usually not successful. I think it’s something we’ve all experienced the equivalent of. We go for job interviews and we feel intimidated. We feel embarrassed. We feel self-conscious. We want to be chosen very desperately. It’s a human emotion in that you go into the room and you basically want to beg for this person to accept you, to tell you that you’re awesome…

Andrew: Yes.

Ryan: …to choose you for the position.

What that forgets of course –and it’s something that you realize when you hire someone for the first time — is that despite all your positions of power and influence, you desperately need to fill this position. When a casting director is casting for a role in a movie, it’s not as if they can’t…they won’t fill the role. They’re like hey, you know what, we’re not going to have a leading man in this movie. By definition they are paid to find someone to fill the spot.

What Clooney realized…Clooney sort of understood that flip and he said to himself okay look, they have a problem. I’m the solution to that problem. So instead of going and groveling or coming at it from a position of weakness, I’m going to understand and empathize where they’re coming from, and I’m going to position myself as the solution to that problem.

What a casting director is looking for is yes, someone who looks good; yes, someone who can do the lines. They are looking for someone who’s going to show up on time every day, who’s going to be dependable, who’s going to be affordable. They’re looking for the perfect person for that role. They need you as much as you need them. That’s what Clooney thought about.

That flip I think is really important about any situation you’re in. What I realized early on in my career as well is that you go around, and you don’t want to get fired. You would never want to get fired from your job. So you endure all these seemingly negative situations because you don’t want to get fired.

But if you thought about it the other way, if you thought about it the other way. If you thought about – so let’s say you do something, you screw up. Now you’re on the edge of getting fired. That would feel like some massive personal failing on your part. You’re a loser, whatever. But if the day before you quit in indignation because you didn’t like your boss, it would be fine, right? You would’ve just left. If quitting a job is empowering, getting fired is not. But objectively they are the same thing.

Andrew: You’re saying in the end you end up in the same place?

Ryan: Right. You don’t work there anymore. That’s all that it means. And so what the stoics talk about is this idea of eliminating the explanation and interpretation of events and seeing them objectively. And you basically flipping your perspective allows you to see those things objectively because you’re understanding that one event can have two very different explanations, and therefore, you logically go, “Okay. They’re all manufactured. They’re not inherent, right?”

And to me that’s something I try to think about in my own life. What is the explanation that I’m bringing to this situation that’s making it either really bad or really intimidating? And what’s a different explanation that I could try that would give me the perspective and the ability to see through the baggage I’m bringing to the table?

Andrew: Here’s one guy who I noticed did that. Oren Klaff is a guy I interviewed a while back on Mixergy.

Ryan: Okay.

Andrew: And he said he did this. He used to walk into investor meetings feeling like he had to beg them for money or be a jester who was going to entertain them so that they would give him money. And he said once he changed his perspective, he just reversed it by thinking, “Well, these people need a good entrepreneur to invest money in. These people need someone who they can bank on, literally.”

Ryan: Right.

Andrew: Then he started to prize himself, and they started to feel like they had to work to get him. And that was a small change in perspective that allowed him to start raising money and it was hugely impactful.

Ryan: Yes.

Andrew: That’s what you’re talking about.

Ryan: Yes, there’s another story I tell about in the book. I don’t tell in the book but it’s something that stuck with me: Ulysses S. Grant, his sort of first experience in battle. He’s hunting this enemy and he’s afraid, he’s afraid. He desperately does not want to meet the enemy in the field of battle because he’s never been in battle. He’s worried what it’s going to be like. And finally, they come to the enemy’s camp, and he realizes that the enemy ran away, that they weren’t there. They hastily made camp and escaped.

And then he realized in that moment that the enemy was just as afraid of him as he was of them. And that’s sort of the whole point. That’s the importance of empathy, the ability to see the same situation from somebody else’s perspective, and understand that it’s not all about you. And often the story you’re telling yourself, even though it’s egotistical in its own way, it’s actually holding you back. It’s actually making your own life more difficult.

Andrew: Let’s go to the big board for the next big idea which is to focus your efforts on what you can control. Who is this guy?

Ryan: Is it Tommy John?

Andrew: Yes.

Ryan: There we go.

Andrew: What happened with him?

Ryan: Yes. Before I tell the story I think it’s very indicative that one of the first things they tell addicts in the 12 Step groups, the first thing they sort of go over is distinction between what we can change and what we cannot change. And the reason is people waste an immense amount of energy, an immense amount of discipline and willpower on trying to change things that are outside of their control. Like, you have crappy parents, they treat you bad. You can wish really hard that you had different parents, but you don’t. These are the parents that you have.

And the part that you can change is how you interact with them. Whether you interact with them. Whether it hurts your feelings. Whether you carry and hold the resentment. Those are the things you can control. And what the stoics did and the stoics repeatedly stress, and I talk about it in the book, is this distinction between the things that are up to us and the things that are not up to us.

And I tell the story of Tommy John because Tommy John is one of the longest playing pitchers in major league baseball. There were these moments in his career that other people would have considered to be either hopeless situations or impossible situations, but he really broke down, you know, is this something that I can change? So he blows out his arm, his pitching arm, and the first doctor tells him, like, “Look, your career is over. A pitcher can’t function without this ligament in his arm.”

And he talks to another doctor who has an experimental idea where they basically take the ligament from his non-pitching elbow and put it into his pitching elbow. This surgery becomes known as, “Tommy John” surgery. The doctor tells Tommy there’s a one in 100 chance that if he gets the surgery he’ll be able to pitch again. And so Tommy goes, “Oh. So you’re saying there’s a chance. Well, I’ll do it.” And he rehabilitates… He gets the surgery, he rehabilitates, and he begins pitching again.

Ironically, he actually becomes a better pitcher after the surgery than he was before. But the point was, getting in the surgery was something he controlled. There was a chance that if he got it, he would improve. It wasn’t an impossible situation, it felt that way, but it wasn’t.

The other story I tell from Tommy is he’s, I believe, 40 years old, and he was cut from the New York Yankees because they said he was too old. They’re almost cutting him out of pity. They’re like, “Look, you’re too old. You don’t want to play baseball anymore.” And he says, “Look, if I show up in training camp….” He says, “If I show up, am I going to get an honest look? Are you actually going to look at me?” And they said, “You shouldn’t be playing baseball. You should quit.” And he said, “Look, do I have a chance of making the team again if I show up and make a good… If I test well at camp?”

And they said, “Yes. Fine. There’s like a one in 100 chance again.” And he says, “Fine, I’m there,” and he trains for months and months and months. He ultimately ends up starting for the Yankees that year, opening day. Because it was something that was in his control. Right? If they said, like, “Look, you’re never going to play again, you’re banned from baseball,” he would have moved on and did something else.

But what he did was, he would focus intensely on these situations where he had a chance. It didn’t matter if he had a sliver of a chance, a tiny chance, what mattered is, did he have a chance.

Andrew:: And he picked being able to play, not in his control, that’s up to them, showed up, completely in his control, so he shows up. That’s what you want us to take away.

Ryan: Right. The effort, the process, that’s what he controlled. The effort. And then whether it worked out or not was outside of his control, but the process was enough, and that’s the distinction that you need to make, and the place that you need to put your effort.

Andrew: All right. On to the big board. The next big idea is to not listen too closely to others, or even to our own doubts, and one of the examples you give is this man and the device that he is holding.

Ryan: Ah, okay. Yeah, you know, I talk about Steve Jobs, he had what… If you read the Walter Isaacson biography, in some ways it’s very critical, and it should be. Steve Jobs was not a perfect individual by any means. But he had what these people call the “Reality Distortion Field,” which, I get. I think they actually mean derisively. But it was this ability for him to see past the boundaries of what other people thought was and wasn’t possible. Right?

So he has an engineer come in, he wants this mouse built a certain way, and the engineer says, “Nope. I’m sorry, it can’t be done. It doesn’t work.” And Steve Jobs says, “Okay, you’re fired.” And then the next guy who comes in his job is to say the mouse is possible, and they work to make that thing happen.

So it sort of goes to what we were just talking about earlier, but I think the problem is we are told over and over again in our lives to be practical, to be realistic, to be reasonable, to listen to what other people are saying. And the problem is, a lot of what other people say or bring to the table has to do with their own baggage, it has to do with their personal beliefs about what is and isn’t physically possible.

That is arbitrary, and Steve Jobs sort of saw through that, and he was notorious for setting these very ambitious goals and deadlines, knowing that is was far better to sort of overreach and try to make something that was perfect, that was flawless. It was beyond whatever capacity people thought that they were capable of. Because that’s better than, you know, trying to be reasonable and then failing at that. Trying to be realistic and failing at that.

And, you know, I think we all have doubts in our lives about whether we can pull something off, but I know, in my experience, I’ve yet to find a series of commitments that I’ve made that I didn’t ultimately end up fulfilling in one way or another. And I am better off for having to have made those aggressive commitments, and then needing to grow and expand to reach them, then I am when I am curbing what I think I am capable of.

I think you see this… Like we were talking about running earlier, before we started the call. You think that your capacity is X, but, objectively, your capacity, your physical capacity, is usually larger than whatever your mind tells you you’re capable of, or vice versa. And if you push past those, that’s when you really test yourself and you find your ability to grow. And so, I think, part of doing great things is having those ambitious goals that force you to reach beyond, maybe, whatever you would be inclined to do if there wasn’t a gun to your head. Like, I find if I sign a contract for a book I’m going to deliver that book, right?

If I’m just, you know, fooling around at my desk, am I going to deliver that book? And am I going to deliver it at that date that I’ve committed to do, that I’m now legally obligated to meet? And so I think deadlines, commitments are super important, and I think the more we can get them to lead us, to be in front of us a little bit, maybe sprint ahead of what we think is possible, the more we’re going to accomplish.

Andrew: I found that myself with running specifically where if I signed up for a marathon, I felt forced to go out and train and to run. And I’ve always completed them one way or the other, even if it meant I had to walk. Like the Vegas marathon I did…

Ryan: Sure.

Andrew:…where I walked it. Seven and a half hours it took me to finish. They stopped doing water support in Vegas. They put the water bottles along the route on the floor for anyone else who wanted them, and I just had to deal with it. But, yeah, you’re right.

Ryan: Yes.

Andrew: All right. Onto the next big idea which is to take action and make your own fortune. And you bring up this guy. How do you pronounce his name? Let me bring him up on the screen for you.

Ryan: Demosthenes. Can you hear me?

Andrew: Yes.

Ryan: Yes, Demosthenes.

Andrew: Yes.

Ryan: The Athenian orator.

Andrew: Okay.

Ryan: So Demosthenes. It’s a fascinating story. It comes from Plutarch, the Roman assayist. But basically Demosthenes he’s born into a wealthy family, but he’s physically disabled. He’s weak and frail. He has a speech impediment. And then I think he’s five or six years old and his parents die, which is terrible. So now he’s an orphan. His parents have died, and he’s basically given these legal guardians who plunder his estate. They steal all the money that he was meant to inherit. This is basically you’re a nine year old, this is like the worst series of events. You lose your parents, you lose your fortune, they neglect your education, you’re basically on your own.

So what Demosthenes decided he would do is he’d seen a great speaker and he was enthralled. And he wanted to become this person. And so his life’s task came mastering the art of oratory. And his other great cause was sort of taking revenge and earning back what had been stolen from him. So you sort of insert this almost movie montage-like series of events.

He decides he’s going to conquer his speech impediment by running and speaking while he’s running. So speaking while he’s out of breath. He practices shouting into the wind to develop his strength of voice. He conquers his speech impediment. He puts rocks in his mouth. And I’m not sure how this actually fixes it, but he puts these rocks in his mouth and he strengthens his tongue and his cheeks and his control over his speaking patterns, until eventually the stutter is gone, too. Then he shaves his head, half of his head.

So he’s too embarrassed to go outside, and he spends every day of the next several years working in an underground, like, I don’t know, war room that he builds for himself. And here he teaches himself the law, he practices speaking, he spends every waking moment of his life preparing for this destiny that he set for himself. Eventually he challenges the guardians in court. He wins in court. They contest it every step of the way. It’s a many year legal battle, but inch by inch he begins to win.

And he makes a name for himself as a speaker and as a lawyer. He eventually wins the case, but what he really won was this career, this calling. He becomes known as the “Voice of Athens.” He’s the greatest speaker in the city. He’s the most knowledgeable of the law. He wins back the fortune, but there’s nothing left. The fortune that he gets is he’s now this powerful and influential politician. You know, I think we all find ourselves in disadvantageous positions we’d rather not be in. Positions that are unfair, you know, given certain disabilities or problems or things we’d rather not have.

And it’s not simply, earlier we were talking about perception, it’s not simply a matter of, like, “Oh, I’m going to look at this as being the glass half full.” It’s not just about thinking that you want it to be better. It’s about taking those steps and actually making it better. About taking action, real action, sustained dedicated persistent actions against your problems and understanding that that’s where the real gains come from.

Andrew: Amazing. I like the idea of a guy who would shave half his head to force himself to feel like he couldn’t leave. To force himself to stay and work for two years until he made it.

Ryan: Right, right.

Andrew: Until he got where he needed to be.

Ryan: You know, I think, not to be flip about it, but today you get picked on, you get screwed over in your childhood. Like, the end of that story as we commonly see it is that the person goes on a murderous rampage.

Andrew: Right. As opposed to saying this is going to be something that can actually be useful. I’ve talked to multiple entrepreneurs who have gone into the basement, not by shaving their heads, not because they put some kind of penalty on themselves if they do, but they’ve said, “I’m going to go into the basement. I’m going to work quietly for a few years and build this thing out.” And ended up doing great.

Ryan: Yes.

Andrew: I see the power of that and it’s so much more useful than going on a murderous rampage.

Ryan: Yes.

Andrew: Not that those are the only two options. Onto the next point which is to start anywhere you can. You give the example of this woman. Let me bring up her photo up here. All right. There it is.

Ryan: Amelia Earhart.

Andrew: Yes, Amelia Earhart. What happened to her when she started?

Ryan: Yes, so, you know, it’s the 1920’s. She’s a female aviator. It’s a very different America; that is this is something that people eagerly embrace. And she finds the things that she is capable of doing are hemmed in by these various constraints and prejudices. And so she gets her, I forget what year, but she gets her first sort of offer that I think any reasonable person in her position would’ve found quite offensive. They’re looking to have the first female flight over the Atlantic, continuous flight over the Atlantic. And the proposition is this: she’s not actually allowed to fly the plane. There’s going to be two male chaperones. She doesn’t get paid, they do.

And basically they’re going to condescendingly treat her as though she is incapable of fending for herself. But someone has agreed to fund this flight and their first pick has dropped out, by the way. So does she want this leftover, declined opportunity that is less than ideal? Does she want to take it. And, of course, what does she say? She says, “Yes.” She says I’ll bite my tongue and I’ll say yes. She flies across the Atlantic. She becomes relatively famous for it and uses that as a launching pad for the rest of her, you know, famous flights, for the platform and the personality she builds.

You know, this was the chapter that I liked writing the most because it was the most personal for me. You know, I left college in 2007. So right during the financial crisis. My class, because I dropped out, my class graduated in 2008, 2009. So at the height of the economic recession from the crisis. And, you know, what I saw most of them do was the opposite of what Amelia Earhart did, right? They all moved back home with their parents. They waited, more or less unemployed, for the perfect job opportunity to come their way.

Meanwhile, you know, a handful of them, I would put myself in this boat, sort of took whatever they could, worked on whatever opportunities were there, and built something. And a bunch of them now ironically are just graduating from grad school, or they went back to school and got their PhD. And they’re still expecting some magical, perfect opportunity to fall in their lap. They’re waiting for Google to call them. They’re waiting for Microsoft to call them or Amazon to come offer and give them their dream job.

And what I want to tell them is, like, “Look, it’s never going to happen. That’s not how it works.” The perfect opportunity very rarely falls in your lap. In fact, a less than perfect, if not objectionable opportunity falls in your lap, you take it, you make the most of it. Then you make the most of 10 other seemingly inferior or frustrating opportunities and then you make your own way from there. And I just love that example from Amelia Earhart.

Andrew: What was it that you took that others would’ve felt like they were too good to take? What’s the opportunity?

Ryan: I dropped out of college for a job that paid me $30,000 a year.

Andrew: What was that?

Ryan: I was working in Hollywood. I took a job as an assistant, literally answering phones at a Hollywood management agency. I was willing to put up with an immense amount of shit because the person who offered me the job told me that I would get direct access from them and instruction from them. And that they would teach me and mold me into someone who could do more than answer the phones. And I was willing – you know?

Andrew: No, sorry. What were you going to say? I want to follow-up, but I want to give you a chance at first say.

Ryan: Yes. Answering someone else’s phone and scheduling their appointments is my worst nightmare. But I was willing to do it because I knew it would lead to something, and I knew that if I could get my foot in the door I would make it into something. And I could’ve waited until I graduated, but I knew that when I graduated I would be in the exact same position. I would just feel more entitled and be more impatient when it came to, you know, paying my dues so to speak.

Andrew: Right. What about then the idea that if you’re answering someone’s phone, if you’re taking the little jobs that people offer you when you have no other opportunities because there are challenges in front of you, that maybe the world starts to see you as a phone answerer…

Ryan: Sure.

Andrew:…instead of a marketer. They start to see you as a guy who goes and gets coffee instead of giving you the opportunities that people who they see with bigger potential.

Ryan: Sure. Two things about that because I think about it a lot. In fact, this guy, he told me. One of the best pieces of advice I ever got was he was, like, “You’re too bad of an assistant to stay as my assistant.” He wants a body to do this job that basically a monkey could do, but you have to illustrate some sort of promise or potential that makes you too good to be a lifer in that position. I quote Andrew Carnegie in the book. He says, “Ideally, your first job should introduce you to the broom.”

And he doesn’t mean you should be beaten with a broom, he means you should understand that you’ve got to start at the bottom. You’ve got to sweep the floors. You’ve got to learn the importance of sweeping the floors and ultimately decide that you want more for yourself. And so I talk about this with my own assistants and with my own employees, is be just good enough that you’re worth betting on. Not so good at the menial task that you’re irreplaceable at them.

Andrew: Okay.

Ryan: Because finding good assistants is very hard. And some people that’s the perfect job for them. Chances are you probably don’t want to be that person. And you don’t want to be the guy that gets coffee. You have to work twice as hard to show that even though I’m getting you coffee, I’ve got good ideas and you should listen to me. But if you’re sitting at home in the same bedroom that you grew up in, waiting for Larry and Sergey to call you and come be an engineer at Google, I think you’re going to be disappointed.

Andrew: Okay. All right. We have big visions for where our companies are going to go, but sometimes we just have to get that first customer really happy, giving them the little things that they’ll allow us to do.

Ryan: Sure. How many people listened to your first show?

Andrew: Ooh, you know what? No one.

Ryan: Right.

Andrew: I don’t think anyone listened. I can’t imagine there were more than ten, seriously.

Ryan: Right. I don’t think anyone read my first articles, you know? But I had to write them. You don’t get an audience because you want one. You get an audience because you’ve earned one.

Andrew: All right. I do remember William Quigley. I took a tape recorder into his office, and he was willing to have a conversation with me. And I recorded it and I don’t think I got ten people on there. It was very frustrating. All right.

Ryan: Is it still up on your site? Can people go back and listen to it?

Andrew: People can go back and listen to it, actually. Yes, it’s still on the site. I don’t even think William Quigley knows that he was my first interview. I was going to speak at an event and I said, “Can I come in and just do a pre-interview with you?” That’s the other thing: pre-interview. So I was going to do a pre-interview with him like my own assistant…

Ryan: Sure.

Andrew:… and record it and post it online. And he was okay with it.

Ryan: Wow.

Andrew: Onto the next and final point which is to have a mission bigger than yourself. I used to know this man as, oh here he is. Who’s this?

Ryan: Is that James Stockdale?

Andrew: Yes. I’ve been pulling articles off of Wikipedia. So it’s a little hard to tell who it is. And yes, it is James Stockdale.

Ryan: And you said what did you used to know him as?

Andrew: Wasn’t he the guy who was the – Ross Perot’s.

Ryan: He was.

Andrew: He was, right?

Ryan: Yes.

Andrew: Ross Perot’s running mate who came across looking like a bumpkin in the debates in the vice presidential debates. But he had this deep, rich history behind him that you talk about . . .

Ryan: Sure.

Andrew: . . . which was what happened to him during the war, in Vietnam.

Ryan: Yes, it’s interesting that we tend to know James Stockdale and John McCain for their political careers, you know, positively or negatively. But that really masks what was utterly incomprehensible heroism, bravery and strength that they showed during Vietnam. And again, whenever you think about the Vietnam war, James Stockdale, he’s shot down, he’s a fighter pilot. He’s a Navy commander. He’s flying a mission over Vietnam and he’s shot down.

And, you know, a lot of the people that I talk about in this book understood stoicism, but maybe not explicitly so. They didn’t actually study it. Stockdale had been given a copy of Epictetus, who is one of the great stoic philosophers. Literally as he’s parachuting down from the wreckage of his plane into what will certainly be a enemy capture, probably very strong interrogation, definitely torture, and possibly even death, he says to himself, “I am leaving the world of technology and entering the world of Epictetus.”

What he meant was my stoicism is going to come in handy in a North Vietnamese prison camp. Stockdale, as he’s parachuting down, he’s not thinking of himself. He’s thinking of the fact that as the highest ranking American POW, he will be in a position to lead the men who up until this point had been more or less leaderless in this camp.

He comes down, and he becomes this immense source of strength for the other men. He’s basically the leader that they needed. He used this all maybe in one of the worst things that you can imagine. He spends seven and a half years in this prison camp. He’s tortured. He’s beaten. He’s placed in solitary confinement. He uses this as an opportunity to provide moral support for the men that he is now responsible for.

Andrew: He is going through here. Look, this is a photo of him at the time. He is going through hell on earth. He says his mission will be to help other people instead of trying to deal with it himself.

Ryan: Yeah. At one point, and this is obviously an extreme example, he goes to kill himself. He attempts to kill himself not because he wanted the pain to end, but he wanted to send a message to his captors that he would not be broken and that they could not use him against the United States.

Actually, it’s funny. I just said the United States. The soldiers could actually speak to each other. They had this language of hand signals and movements. He would remind the other soldiers, he would say U.S. Not for U.S.A., or United States, but for unity over self. It was this idea of what we’re going through is hellish, and awful, and completely unacceptable by even the most liberal interpretation of the Geneva Convention. But we have each other and we have a responsibility to each other and to our country that’s going to allow us to endure this. We’re going to think about what other people are going through rather than our own problems and our own situations. That’s what’s going to give us the strength and fortitude persevere through this situation.

I mentioned John McCain earlier. John McCain was in the same prison camp. People don’t understand this or they don’t know this. John McCain’s father was a theater commander. He was an admiral also in the Vietnam War. When the North Vietnamese realized this, they offered to allow John McCain to leave the camp.

Normally the way it works is when you’re a POW, it’s sort of first one in, first one out. You would leave, you would get freedom exchanges over time based on your place. They realized that they have the commanding admiral’s son in captivity. They want to use this as a weapon. They want to embarrass the United States by inveighing or applying pressure on John McCain to get him to abandon his fellow prisoners and leave early.

John McCain, he actually refuses to do this. John McCain was tortured in a Vietnam prison camp, and that’s more than most of us will ever go through. But John McCain willingly endured that torture so someone else could leave first and so he would undermine the other men and women who were not as privileged as he was. To me, that’s just so incomprehensibly brave and stoic as to almost be without description.

Andrew: That’s the answer, then. When we’re going through trouble, instead of saying I only have to deal with this because I have to first heal myself, see if there are other people who we can help, or find a mission, any mission, bigger than our own current circumstances.

Ryan: Sure. Look, you’re an entrepreneur and you’re having trouble with the company. You’re stressed and you’re overwhelmed. You can think about how this affects you financially. You can think about all the problems that it’s causing for you, whether it’s stress in your marriage, or your life, or it’s just more than you signed for.

Or you can think about all the employees that you brought onto this business that are dependent on you for their livelihood or the customers who depend on your business to do what they do. Or in your case or in my case, our readers and fans who consume our work. It’s that ability to think of something a little bit larger than yourself that allows you to find something within yourself that maybe you didn’t know you had, and to give that little bit extra.

Andrew: The other thing I just recently found out as I was prepping for this session, is James Stockdale’s middle name is Bond. James Bond Stockdale.

Ryan: Really?

Andrew: Yea. It’s on Wikipedia so it’s got to be true. I’m zooming in a little too much.

Ryan: Of course.

Andrew: There it is. All right. The book is, “The Obstacle is the Way”. We covered a bunch of ideas from the book here in the session but obviously in a small session we can’t cover all. Follow-up, just grab it from anywhere. There it is. The Obstacle is the Way. Thank you so much for doing this session with me.

Ryan: Yea, of course. It was great.

Andrew: You bet. Thank you all for being a part of it. If you got anything of value, find a way to say thank you to Ryan. Ryan, what’s a good way for them to do that?

Ryan: You can just email me. It’s ryanholiday@gmail.com. It’s funny, you know, I did this for the growth hacking book and your readers really do email. It’s amazing. I’ve had some good conversations.

Andrew: You know what, you’re surprisingly easy to contact

Ryan: There’s worse things in the world than having people who like what you do email you and talk to you about it. And I think although obviously I’m very busy and have stuff going on, I think I’ve benefited from that relationship because it tells me what my readers and fans and my potential audience actually need, want and are struggling with. So that line of communication has been very beneficial and important to me.

Andrew: I tell people to do that all the time, not enough people take me up on that opportunity. I can’t tell you how many people I met that way. I’m about to, tomorrow, I’m going to go see Noah Kagan in a mansion in Napa that he rented for the week. He invited me to come by and say Hi, to hang out.

The only reason he and I connected was a few years ago I read his blog, I got something of value out of it and I sent him a note and as a result he and I became friends and we’ve known each other now for almost a decade.

Ryan: Yea, that’s how it works. We were talking about waiting for the perfect opportunity. No one is going to come force you and Noah to get to know each other. Very rarely is this unsolicited introduction going to flutter into your hands. You have to seize the offensive. In a very minor way, take some initiative, shoot someone an email and you never know what happens.

Andrew: You know I just realized actually, he thanked me. I commented on his site and he did something that no one had every done before, he sent me an email saying, “hey dude, saw the comment, thanks for writing on the site” which was unbelievable. So, of course then I stayed in touch with him and then I wrote a post or two on his site back then and we became friends.

Ryan: And you never know what people are going to go on to do. I think a lot of times people are very judgmental. They’re like, “This person’s a loser. I don’t know who they are. I don’t know what they’re doing”. You have a bunch of people that you emailed when they were just random people and then they went on to start this company, or do this thing.

Andrew: One great example is Mike Del Ponte. I got an email from Tim Ferris saying, “Hey, his stuff is really good. The Soma water pitcher that purifies water is beautiful, it’s really good, you might want to have him on.” I say, “yeah, let’s have him on.” I do a quick search and I realize, Mike emailed me back when he had a job working for someone who I interviewed. He said, “can you teach me this interviewing process, what do I do?” And I responded to him back then and he’s gone on to great things and one of those great things is building this company and he came on to do an interview about it. So yea I know what you mean.

Ryan: For sure.

Andrew: All right. Find a way to say, thank you. Really, don’t overwhelm people just find a way to say thank you. I’m going to do it right now. Ryan, thank you both for doing the session with me and my team said please don’t let Ryan go without saying thank you for helping us with Mixergy because you know so many great people that became interviewees here.

And I really appreciate the contribution that you’ve made to my personal mission here by introducing me to people who’ve come on to do interviews, courses and otherwise be a part of the community. Thank you.